Options for Clients Who Cannot Pay the IRS

Author: Jim Buttonow

Per the IRS Education Provider Standards this course must be COMPLETED by 12/31/2025 to receive credits. NOTE: Go to My Professional Profile in your CCH CPELink account settings to ensure your name, and PTIN number; matches your PTIN card

Statistics show that over 30 million individual taxpayers file a tax return with an unpaid balance due. Unfortunately, some are our clients who fall on hard times and cannot fully pay their tax obligations. Fortunately, there are options when they cannot fully pay their liability. In this course, join Jim Buttonow as he explores the six IRS alternatives when your client cannot fully pay their liability, the IRS collection alternatives. This course will examine the rules and requirements for installment agreements, extensions to pay, and payment deferrals (namely, currently not collectible status). We also give you the fundamental knowledge to answer your client’s question on whether they can “settle their tax bill’ for less than the amount owed (i.e. the IRS offer in compromise qualification rules). At the end of the course, you will have the basic knowledge to identify what alternative is best and be able to execute that alternative in the most efficient and effective manner for your client.

Publication Date: October 2022

Designed For
Tax professionals and tax firm leaders who need to help their clients evaluate, select, and execute IRS collection alternatives when they cannot full pay their balances owed to the IRS.

Topics Covered

• Options for Clients Who Cannot Pay the IRS
• IRS Collection Alternative Principles
• How to Set Up a Collection Alternative
• IRS Collection Statute Expiration Date (CSED)
• Actions Can Extend the CSED
• Getting a Payoff Amount from the IRS
• IRS Forms for Simple Installment Agreements
• Collection Agreements
• IRS Online Payment Agreement (OPA)
• IRS Collection Alternatives - Complex Ability-to-pay Options
• Components of Determining Ability to Pay
• Determining Average Monthly Household Income
• Determining Average Allowable Monthly Household Expenses
• Three Types of Expenses for Individuals
• Expenses Limited by IRS Collection Standards
• 2022 Expense Limitations
• IRS Form 433 and IRS Expense Limitation Rules
• Documentation Required for ATP Agreements
• IRS Forms for Ability to Pay Agreements
• 3 Types of OICs
• IRS Offer in Compromise Program
• Qualifying for an OIC
• 5 Components of an OIC
• OIC Qualification/Offer Amount Formulas
• Two OIC Payment Options
• OIC Practical Considerations
• The Realities of the IRS OIC Program
• Practice Lien and Levy Avoidance
• Using the Extension to Pay for a Levy Release
• Lien Avoidance: Use the ETP/SLIA Combo
• IRS Field Collection
• Avoid Payment Plan Defaults
• Appeal Adverse Collection Determinations
• Get into a Payment Plan to Reduce FTP Penalty
• Abate Penalties Toward the End of the Payment Plan
• Changes in IRS Collection Alternatives
• Reference Guide

Learning Objectives

• Identify trends in IRS collection and collection enforcement
• Recognize how to help your client avoid enforced IRS collection (liens, levies, and passport restrictions)
• Recognize how to explain IRS collection alternatives
• Recognize how to determine which alternative is best
• Recognize and apply the rules for the various types of IRS installment agreements, currently not collectible status, and extensions to fully pay
• Identify when an offer in compromise is a viable alternative for your client
• Recognize how to advise your client which IRS collection alternative is best for their situation
• Identify approximately how many taxpayers currently owe the IRS for back taxes based on recent IRS statistics
• Identify the IRS form that relates to a balance due notice
• Identify the type of collection alternatives that can be done online at IRS.gov
• Identify the IRS collection alternative that has a high level of effort
• Identify on average, the percent of IRS payment plans that are defaulted each year, mainly due to missed payments and/or new unpaid balances

Level
Basic

Instructional Method
Self-Study

NASBA Field of Study
Taxes (2 hours)

Program Prerequisites
None

Advance Preparation
None