Feb 14, 2008

Installment Agreement with the IRS

QUESTION: Does an installment plan extend the 10 year collection statute? I currently have an installment plan for 1998 taxes which went in force last year. Will the statute apply at the end of this year 2008?

ANSWER: The 10 year statutory collection period begins on the date that the tax balance owed is assessed (not when the tax was originally due). The tax is assessed generally upon the processing of your return by the IRS. That means that if your 1998 tax return was received and processed on March 31, 1999, for example, then the statute would expire on March 31, 2009. However, if you filed your 1998 tax return late, let's say in 2000 for this example, once again the statute begins on the date of assessment, and the 10 years would end in 2010.

An installment agreement does not extend this 10 year period. There are other events, such as bankruptcy, filing for an offer in compromise, or due process hearings that, by IRS law, do extend statute expiration dates. Also, installment agreements may or may not pay off the balance you owe. Most agreements will full pay your liability within the 10 year period. But there are partial payment installment agreements that, even though monthly payments are made, do not full pay the liability within the statute period. The 10 year statute may actually end before the remaining balance is paid off. If that happens then the debt falls off.

1 responses:

IRS Help For You February 16, 2008 at 10:11 PM  

Hey Jimbo,
I enjoyed (as always) reading your post this week ! Its Valenties....what are your doing posting ??? LOL ! No, I thought this was a great topic to write about this week; a very common question asked very often I'm sure


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