Order from us for quality, customized work in due time of your choice.
I just need the answer for:
Will penalty and interest stop, or rates change if w
I just need the answer for:
Will penalty and interest stop, or rates change if we enter an installment agreement?
INSTALLMENT AGREEMENT
Application for Installment Payment Agreement general information: Following the filing of a
return without payment in full or following an examination and the exhaustion or waiver of Appeals
Division and the United States Tax Court options, the tax is assessed. If the taxpayer is unable to pay
in full, the taxpayer may request an Installment Payment Agreement (“IPA”) or may file an Offer in
Compromise (“OIC”) to reduce the obligation. In addition, IRS may file a tax lien of record and
propose to levy on taxpayer assets. The taxpayer is entitled to a Collection Due Process hearing
(“CDP”) if any administrative rights were not provided or were denied. This includes after the filing
of a lien, prior to a levy, and collection alternatives, including an IPA and an OIC. The United States
Tax Court has jurisdiction to review adverse results of CDP proceedings. The United States Tax Court
does not have jurisdiction to review self-assessed tax because there is no deficiency in tax.
Assignment:
Archie and Betty Veronica, your clients, have filed their 2020 tax return timely on 4/15/2021. They
had a great year in the stock market in 2019. However, much of that was lost in 2020 when they
had to sell stocks being held on margin at substantial losses due to the market mini-crash. Their
cash position, at the time of filing, was bad. They were forced to file owing $54,000 in taxes for
2020. They cannot possibly pay their taxes today. They are unable to borrow any money. Your firm
routinely charges $5,000 for the preparation of an installment agreement involving the preparation
of a Form 433-A. Your clients understand this and are willing to pay assuming that there are no
better options.
They have substantial assets, but those assets are locked up in investments that cannot be liquidated
easily or quickly. They also maintain an expensive lifestyle. They are not a candidate for an Offer in
Compromise.
They have received several IRS letters requesting payment. They do not know what to do. They have
come to your office so that you can advise them what is the best course of action for them to take. They
have asked that you provide them with alternatives and have asked you several questions. They are
also fee sensitive but will pay whatever it takes if they can. They have asked you the following:
1. “If we can come up with the cash relatively quickly, somehow, can you hold off the
IRS without having to go through the expense of doing an installment agreement.
2. “Assuming we cannot come up with any money at all right now what kind of an installment
agreement can we get? “
3. “What needs to be filed or what needs to be done under each of the preceding scenarios in order
to secure the installment agreement and if we secure an installment agreement what is the
maximum amount of time, we can get to pay off our IRS debt?”
4. Will penalty and interest stop, or rates change if we enter an installment agreement? What are
the current rates of interest and the penalty levels if these continue after the installment
agreement?”
Order from us for quality, customized work in due time of your choice.