Maryland IRS Installment Agreement Attorneys

For years, the submission of an Installment Agreement was a taxpayer-friendly act. While Section 6331(i)(5) and 6331(k)(3) of the Internal Revenue Code indicated that the filing, rejection and termination of an Installment Agreement could cause the statute of limitations ("SOL") for collection to toll, such practices were not implemented. Taxpayers reaped the benefits of IRC §6331(k)(2) whereby no forced collection action was taken during the Installment Agreement process and the SOL continued to run.

As the financial landscape of the country has changed, the government has grown more aggressive in its collection efforts. New Treasury Regulations that mirror the sentiment of IRC §§6331(i)(5) and 6331(k)(3) were finalized. Under newly-implemented Treas. Reg. §301.6159-1(g), the SOL for collections will be tolled during the following periods:

1. While a proposed Installment Agreement is pending;
2. Over the 30 days immediately following the rejection of a proposed Installment Agreement;
3. Over the 30 days immediately following the termination of an existing Installment Agreement; and
4. The period during which any appeal made within the 30-day period specified in (2) and (3) above is pending with the IRS Office of Appeals.

In order to determine when an Installment Agreement is "pending," one must look to Treas. Reg. §301.6159-1(b)(2). The regulation provides that an Installment Agreement is "pending when it is accepted for processing." The duration for which it maintains a "pending" status continues until the Internal Revenue Service notifies the taxpayer of a rejection or the taxpayer withdraws his proposal. Treas. Reg. §301.6159-1(b)(2).

Even with the new guidance from the Treasury Department, unanswered questions still persist. While the regulation became applicable on November 25, 2009 it is unclear whether Installment Agreements negotiated prior to the effective date have any impact on SOLs. Further, the Internal Revenue Service will not notify a taxpayer as to when it considers an Installment Agreement to be pending. Without knowledge of the exact timing, calculating the SOL remains an inexact science.