Final Regs. Update Rules on PayingTax in Installments

On November 24, the IRS issued final regulations governing the payment of tax liabilities in installments (T.D. 9473). The regulations reflect changes to the law made by various acts going as far back as 1996.

Sec. 6159 allows taxpayers who cannot pay their tax liabilities in full the option to enter into an installment agreement and pay off those liabilities over a period of time. The IRS is authorized to enter into a written agreement with the taxpayer that will require installment payments based on the amount the taxpayer owes and his or her ability to pay that amount within the time the IRS can legally collect payment.

Various acts have affected taxpayer rights under such agreements. Under ments and adopt proposed regulations (with some clarifications) that the IRS issued in 2007 (REG-100841-97). Among the clarifications, the regulations explain that a taxpayer may submit a request to modify or terminate an installment agreement but that such a request will not suspend the statute of limitation on collection, and the taxpayer must still comply with the existing installment agreement while the request is being considered. The regulations also clarify that the IRS can terminate an installment agreement if the taxpayer provides materially incomplete or inaccurate information to the IRS.

The final regulations were effective November 25, 2009.