The perception is that if you accept an installment agreement with the IRS, you'll be in it forever.
IRS installmentagreements are dated to. The end date is 10 years from when your liability to the IRS began. The CSED is not suspended while an installment agreement is in effect.
Have you ever had an argument with a wife or girlfriend? Things can get really hot, especially when they're bad. It's especially painful for men because wives and girlfriends have a long memory. They don't seem to remember when they were wrong; they just seem to remember all the foolish mistakes we've made. Well, anyway, if you argue with the wife or girlfriend, it makes sense to give up.
If you keep arguing, things will continue to heat up for an extended period of time. If you're especially foolish, you can mention it later, which has the added benefit of extending the original hostility that could have diminished since then. Things are very similar in federal tax law. So today I'm going to talk a little bit about the toll, which is a word and a concept that aren't very interesting except when it applies to you.
The Internal Revenue Code contains a limitation on the government's authority to collect taxes from us. It's called the statute of limitations. For example, once you file your return, the IRS generally must pay any additional taxes within three years of filing that return. Similarly, if you file a return and owe money, the IRS generally has 10 years to collect that money.
These time periods are designed to protect taxpayers from prolonged long-term problems with the IRS. The Internal Revenue Code also contains provisions on tolls. These are actions taken by foolish people who unnecessarily extend the statute of limitations. For example, if you owe taxes and seek an installment agreement so that you can pay those taxes for a longer period of time, the statute of limitations is suspended or suspended while your application is pending.
Because an application for an installment agreement can be reviewed by any number of IRS divisions and can be reviewed by the U.S. Department of State. UU. Tax Court; the statute of limitations could perhaps be extended by two, three or four years.
Similarly, if you owe taxes that you can't pay and seek to commit or settle them for a smaller amount, your request for a commitment or agreement also extends or sticks the statute of limitations. A commitment request is usually very long and often requires several levels of review. Once again, you can extend the statute of limitations to three or four years. And that's one of the many problems I have against these television commercials with 800 numbers that promise deals “for cents on the dollar”.
They have employees who submit important forms to the IRS in an effort to obtain some form of temporary or administrative relief, and are often completely unaware of the impact it has on the statute of limitations. So, if you owe money to the Internal Revenue Service and can't pay or are thinking about bankruptcy, are looking for an installment agreement, a commitment on the amount owed, or a reduction in the penalty, you'll want to make sure your representative understands the statute of limitations and the actions that may call for the law of lapse. The worst possible conclusion would be to call an 800 number, spend several thousand dollars to have them work on your case for two or three years, make them unsuccessful (which is common), and then realize that all the money you invested in the case was not only wasted, but your actions actually extended the time period where the IRS can prosecute you, which it certainly will. And if you have a fight with the IRS, make sure you don't keep the wound open for an extended period of time.
IRS policy dictates that Form 900 be limited to no more than five years, plus up to one year to take into account changes in the agreement. If you default on missed payments, the installment agreement may be terminated and the IRS may begin taking enforcement action. If the requested installment agreement is rejected, the collection period is suspended for an additional 30 days. Under IRS policy, such extensions should not last more than 3 months after the date on which the installment agreement pays the tax in full and, in no case, more than 5 years, and the collection period may only be extended once per tax period.
The most important benefit of establishing an IRS installment agreement is that the IRS will stop taking any other collection action against you. The effect of §6331 (k), as revised, is to extend the statute for as long as a request for an installment agreement is pending and for the time during which administrative procedures to terminate an agreement continue to be carried out, but not for the entire time the agreement is in effect. The IRS can only ask you to sign the exemption if it is in conjunction with a filed installment agreement. Form 900, Tax Collection Exemption, is only executed in connection with the granting of an installment agreement and only in certain situations.
Applicants must submit the form to the IRS within 30 days from the date of their letter of acceptance of the installment agreement to ask the IRS to reconsider their status. Once this 10-year period or statute of limitations has expired, the IRS can no longer attempt to collect the balance owed by the IRS. In connection with this, in the past, some IRS offices had an unseemly habit of terminating or threatening to rescind installment agreements simply to compel taxpayers who otherwise fully complied with legal regulations. Generally, the IRS will not take enforcement action while the installment agreement is pending and for an additional 30 days after the rejection or termination, giving you time to request an appeal.
Since a request for an installment agreement can be reviewed by any number of IRS divisions and can be reviewed by the U. The changes to section 6331 (k) () had the effect of prohibiting collection by lien while a request for an installment agreement was pending, or while an agreement was in effect, or during the period after the IRS notified the taxpayer of its intention to rescind an agreement and during any such appeal rescission. . .