What is the benefit of..............

[BOB W]

............ an Installment plan over just paying what you can regularly.

[JohnH]

Primarily, the installment agreement avoids levy of bank accounts, wage garnishments, or liens filed against one's home.

[BOB W]

If the taxpayer is making payments will the IRS attach levies?

[JohnH]

Absolutely. Once the account gets into ACS, it's all computer driven and interim payments don't reset the clock. Years ago it was possible to dribble money in and delay the process, but with the automated systems they use now, it has no effect.

[New York Enrolled Agent]

Absolutely. Once the account gets into ACS, it's all computer driven and interim payments don't reset the clock. Years ago it was possible to dribble money in and delay the process, but with the automated systems they use now, it has no effect.

Are you talking about a lien rather than a levy??? The other poster said "levies" but I'm not sure what he really meant. Typically, it would take a long time before a levy was considered. And even then, the taxpayer has a right to a CDP hearing before any levy can be activated.

[BOB W]

Are you talking about a lien rather than a levy??? The other poster said "levies" but I'm not sure what he really meant. Typically, it would take a long time before a levy was considered. And even then, the taxpayer has a right to a CDP hearing before any levy can be activated.

Levies Liens it is all the same to me as I am not into that side of the IRS. In my 35 years in this business I have very little exposure to such problems. My main concern was the importance of a payment plan when the T/P wants to make monthly payments [free style] and the pros and cons of a payments plan.

[Lion]

Lower Interest?

Do you get a lower interest rate while on a payment plan?

[Black Bart]

Ridin' the IRS

If the taxpayer is making payments will the IRS attach levies...In my 35 years in this business I have very little exposure** to such problems.

Absolutely. Once the account gets into ACS, it's all computer driven and interim payments don't reset the clock. Years ago it was possible to dribble money in and delay the process, but with the automated systems they use now, it has no effect.

John's right, Bob. Those picky peckerwoods used to give extended free rides, handling dab-paying taxpayers with kid gloves, and sending three nice "regarding this oversight" letters. Now, the dirty, rotten, low-down, inexcrupulous rats slap you with an iron fist in...hmm, let's see now...158 days I guess it is 'cause one of my deadbeat clients** just settled for '07 and it went like so:

4-15-08/ We extend and send no money (in accordance with JohnH's oft-stated and delightfully correct policy of avoiding FTF penalty without payin' a centavo).

10-15-08/ 1040 filed $2,700 tax due -- We send $1,000.

11-24-08/ Letter #1: "According to our records, you have an amount due on your income tax...If...already paid or...arranged...installment...please disregard..." -- We ignore this one.

1-5-09/ Letter #2: "According to our records, you haven't paid all you owe...We can file a Notice of Federal Tax Lien if your balance is not paid within 10 days..."
-- IRS applies $600 stimulus I left off (please keep remarks to yourself) and we send $350.

2-16-09/ Letter #3: "We previously wrote you about your unpaid account, but you haven't contacted us...if we don't hear from you we will have no choice but to proceed with steps required to collect..." -- We send $500.

3-23-09/ Letter #4 (via certified mail): "URGENT!! We intend to levy on certain assets. Please respond NOW." -- We pay up next day; balance plus pen/int.

I did this a couple of times myself just to see what would happen (nothing did), but the EA license killed that and the fun's over.

**Say Bob; I think the reduced exposure is 'cause you Yanks have all the money up there -- I swear I'm votin' for Obama next time to help "spread the wealth." These "pore boys" down here drive me crazy as a Junebug tryin' to string it out without payin' the $43/$105 installment fee.

[thomtax]

If I understand it correctly, they do give you the benefit of the penalty being .25 on a payment plan versus .50 without a plan.

LT