IRS Installment Payment Plan Program Flawed

IRS Installment Payment Plan Program Flawed

[W]hen delinquent taxpayers respond to balance-due notices from the IRS, the agency often does not promptly process the cases, resulting in unnecessary delays and costs. The IRS and taxpayers sometimes enter into streamlined installment agreements when taxpayers may have the ability to fully pay their tax liability. In other cases, taxpayers did not have the income to support the payment amount required.

TIGTA selected a random sample of 60 balance-due cases to determine whether the cases were worked properly and procedures were followed. Fifty-seven (95 percent) of the 60 cases involved streamlined installment agreements. In 17 of the 57 cases (30 percent), installment agreements were established when taxpayers may have had the ability to fully pay their tax debts and could have avoided the costs of the installment agreement, which include penalties and interest.

TIGTA estimates that in the weeks selected for the sample, 1,874 taxpayers may have had the ability to pay their tax liabilities in full. Other times, it appeared the taxpayers did not have the income to support the payment amounts required by the terms of the installment agreements.