Outstanding Tax Debt Repayment Term Extended From 5 to 6 Years

Recognizing that many Taxpayers are having a difficult time paying their liabilities, including outstanding tax debts, the IRS has relaxed another one of its rules relating to the repayment of past-due taxes. This change specifically applies to those taxpayers who owe more than $50,000 in combined tax, penalty and interest but who have the ability to fully satisfy the liability within 6 years. The previous rule only extended this benefit to 5 years. While the monthly payment amount of most installment agreements is subject to the national and local standard expenses set by the IRS, under the new rules, a qualified taxpayer will be credited with otherwise disallowed expenses in excess of the IRS' predetermined standards. This should allow for a taxpayer to claim the full amount of their actual expenses without limitation thereby allowing more taxpayers to enter into reasonable repayment plans with the IRS without requiring extreme changes to their normal standard of living.

For more information on this change, see http://www.irs.gov/individuals/article/0,,id=96543,00.html.