Appealing an IRS Installment Agreement

Taxpayer Rights To Appeal An IRS Installment Agreement

appeal installment agreementAppealing an IRS Installment Agreement (IA) is within your rights as a taxpayer if it is denied or rejected, terminated, or proposed for termination. With regards to terminated agreements, On January 1, 1997, a taxpayer could appeal an IA because it became a part of the Collection Appeals Program (CAP) when it was included in the Taxpayer Bill of Rights 2.  In 1998, RRA 98 put appealing a rejected or denied IA into the CAP program as well. Below you will find out how to appeal a newly requested IA that was rejected or denied and how to appeal a preexisting IA that was terminated or is proposed for termination by the IRS. Remember, the IRS has to wait 30 days after a termination or rejection of an IA to levy any property. If you appeal within 30 days from the date of your notice, the IRS has to wait until the appeal is completed.

How to Appeal a Rejected IRS Installment Agreement

If your IRS Installment Agreement is rejected, you will receive notice in the mail from the IRS, a phone call, or you might be contacted by an actual Revenue Officer.

If the IRS notified you via a letter or by phone and it wasn’t a Revenue Officer:

  1. Call the Internal Revenue Service using the phone number on your letter right away
  2. Tell the IRS why you should have your Installment Agreement accepted/reinstated
  3. If they don’t want to reconsider your IA request then speak to a Revenue Officer or their manager
  4. If they are not willing to work with you tell them you would like to appeal the decision
  5. Move to step 4 below

If an IRS Revenue Officer Notified of your IA rejection:

  1. Call the Phone number on your notice and tell them why you want to appeal the decision
  2. If the IRS Revenue Officer refuses to reinstate or accept your IA speak to their manager
  3. If you have no success with the Revenue Officer’s manager request to speak to a Collections Manager
  4. Talk to or have a “conference” with your Collections Manager and explain your case
  5. Fill out Form 9423 – Collection Appeals Request (if the original rejection letter came in writing)
  6. Preferably attach a written letter of your request for appeal with Form 9423
  7. Send in Form 9423, postmarked at least 30 days within the date on your CP 523/IRS letter
  8. Wait for the decision. Realize Appeals’ decisions are binding for you and the IRS.

Common Reasons an IRS Installment Agreement Is Rejected or Denied

Many times the IRS will reject an Installment Agreement for good reasons. First, if your IA requires financial verification, the IRS requires Form 433 completed which is called the Collection Information Statement. This verifies your income, assets, expenses and so on. The IRS may reject your IA if it thinks your living expenses are not necessary such as large car payments, you send your kids to private colleges, etc. Anything that is not absolutely necessary to spend money on the IRS will hold against you. Second, the IRS may reject an IA if Form 433 was incomplete, or not truthful. Third, the IRS may reject any IA request if you have defaulted on an Installment Agreement in the past. Lastly, failing to file returns will cause problems.

How to Appeal the Termination of an Installment Agreement or Reinstate It

Typically, taxpayers will receive a Installment Agreement termination notice in the mail called “CP 523,” which notifies the IRS is going to cancel your IA. This IA letter usually means you defaulted or failed to pay, the reason you defaulted, and a notification of assets they intend to levy (and what you can do about it). Understand the IA terminates 46 days after the day on the notice unless you appeal within 30 days of the date on the notice. If you wait longer than 30 days to appeal, typically the IA terminates on day 46, but you have until day 76 of the date on the notice to request an Appeal (which is now more of a request to reinstate the IA). A general rule is that you cannot make more than 1 request to appeal within a 76 day period.

If an IRS Revenue Officer Notified of your IA rejection:

  1. Call the IRS number on your notice and tell them why you want to appeal the decision
  2. Make sure to call within 30 days at best or 76 days at worst of the date on the notice (period to make an appeal)
  3. If the IRS Revenue Officer refuses to reinstate or accept your IA speak to their manager
  4. If you have no success with the Revenue Officer’s manager request to speak to a Collections Manager
  5. Talk to or have a “conference” with your local IRS Collections Manager and explain your case
  6. Complete Form 9423 – Collection Appeals Request (if the original rejection letter came in writing)
  7. Preferably attach a written letter of your request for appeal with Form 9423
  8. Send in Form 9423, postmarked at least 30 days within the date on your CP 523/IRS letter\

Common Reasons an IRS Installment Agreement is Terminated

An IRS Installment Agreement may be terminated for a few reasons. First, if you miss or fail to make a payment the IRS will usually wait 30 days before terminating your agreement. The Feds will often give you the opportunity to reinstate it if it is the first or second time. Second, the IRS may terminate an IA if you do not file your tax returns going forward after receiving an IA acceptance. Third, the IRS may annul an IA if they find out that the information you submitted on Form 433 was incorrect or untruthful. Lastly, if you owe the IRS more, in other words, you have added to the outstanding balance the IRS can terminate your IA.

In requesting any IA appeal it is a good idea to use a professional because the Collection Information Statement is not straightforward. Moreover, you want to work with someone who does this regularly for taxpayers and who has the experience and track record of getting most IA requests accepted.