March 9, 2002 marked the final nail in the proverbial coffin of the "kinder and gentler" IRS when Congress passed H.R. 3090. The key change was that the 10-year Collection Statute was suspended on all pending and future Offers in Compromise filed with the Internal Revenue Service. In addition, the IRS revised its acceptance criterion policy on Offers and Installment Agreements. In recent weeks this "new" IRS attitude has been on full display - from the firm's lower dollar income taxes cases to million dollar employment tax disputes.

Policy Statement P-5-100 [summarized] essentially states Offers will not be considered if the taxpayer can, under installment agreement rules, full pay the liability within the Collection Statute, plus five (5) years [The 10-year Collection Statute clock begins on the day a tax is assessed]. In addition, Installment Agreements will only be granted if the balance can be paid within the Collection Statute, plus five (5) years. Furthermore, in general, Taxpayers who refuse to sign Form 900, Collection Statute Expiration Date Waivers (CSED Extensions) will be denied Installment Agreements. An added twist in cases with multiple delinquent tax periods is the IRS will now grant Installment Agreements [called Specific Account Installment Agreements] for only selected tax years that can be paid within the Collection Statute and report the remaining tax periods as Uncollectible. The advantage to the IRS is that it effectively gives them another bite of the apple in that, after the agreement is paid, they request another installment agreement with CSED extension waivers. Calculation of the collection statute extension will be from the NEWEST tax module and not the oldest. In a typical case the IRS could effectively obtain a 15 - 20 year Collection Statute.

These changes effectively maximize the collection potential of delinquent accounts by the IRS, minimizes the number of taxpayers who will qualify for an Offer in Compromise and ensures that IRS Collection personnel will be a presence in numerous taxpayers' lives for years to come.

If you have any questions, please do not hesitate to contact me at 877-426-3121.

For more information on Offer in Compromise >>

Home