CTRS CTRS Installment Agreements and Payment Plans 2

Question 1

What is the IRS's 'Fresh Start' initiative and how did it affect installment agreement thresholds?

Accepted Answer

Fresh Start expanded the Streamlined IA threshold from $25,000 to $50,000 and extended the payment term from 60 to 72 months

Answer

Fresh Start eliminated all penalties for first-time delinquent taxpayers

Answer

Fresh Start reduced interest rates on installment agreements to 1%

Answer

Fresh Start created a new OIC category for taxpayers with student loan debt

Question 2

Under what circumstances can the IRS default or terminate an existing installment agreement?

Accepted Answer

If the taxpayer fails to make a required payment, fails to file a required return, or incurs a new tax liability

Answer

Only if the taxpayer misses three consecutive payments

Answer

Only if the taxpayer's income increases above the original threshold

Answer

Only at the end of the calendar year during an annual review

Question 3

What is a 'Currently Not Collectible' (CNC) status and how does it compare to an installment agreement?

Accepted Answer

CNC is a temporary hardship status that suspends collection activity without requiring payments, unlike an IA which requires monthly payments

Answer

CNC is identical to an IA but with a zero monthly payment amount

Answer

CNC permanently eliminates the tax liability, while an IA requires full payment

Answer

CNC is only available for taxpayers who have filed for bankruptcy

Question 4

What is the In-Business Trust Fund Express Installment Agreement (IBTF-Express IA)?

Accepted Answer

An installment agreement for businesses with payroll tax liabilities up to $25,000 that can be paid within 24 months without a financial statement

Answer

An agreement for individual taxpayers with trust fund penalties up to $50,000

Answer

An expedited agreement for sole proprietors filing Schedule C

Answer

A special agreement for tax professionals managing client trust funds

Question 5

Can a taxpayer request an installment agreement while a Collection Due Process hearing is pending?

Accepted Answer

Yes, and proposing an installment agreement is one of the collection alternatives that can be raised at a CDP hearing

Answer

No, CDP hearings automatically suspend all payment arrangement requests

Answer

Only if the taxpayer withdraws the CDP hearing request first

Answer

Only if the taxpayer has no prior installment agreements on record

Question 6

What financial disclosure form must accompany a request for a non-streamlined installment agreement for an individual taxpayer owing more than $50,000?

Accepted Answer

Form 433-A (Collection Information Statement for Wage Earners and Self-Employed Individuals)

Answer

Form 433-B (Collection Information Statement for Businesses)

Answer

Form 433-F (Collection Information Statement)

Answer

Form 656 (Offer in Compromise)