Regular Installment Payment Calculation

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  • #32549
    Joseph Damiens
    Participant

    when doing a regular installment, in my current case, 150k debt, 6k/mo of RCP income, is the installment payment the entire RCP or will IRS consent to a lesser payment that pays the debt over the CSED. I’m currently trying out both canopy and pitbull and each software is calculating this 2 different ways. pitbull is saying the client may have to make a lump sum payment equal to equity in assets and the balance over the max csed period with a payment of 1500/mo. Canopy is calculating this as a 6k/mo payment. What can we expect out of the IRS?

    #32567
    Eric Green
    Keymaster

    Joseph,

    The IRS wants the debt paid as quickly as possible, so usually they will seek the equity in assets that can be tapped and then a payment to get the debt paid, so in this case the 6K. However, there are some exceptions:

    1. The one year rule (use actual expenses for one year then RCP calculated payment for the rest)
    2. The 60 month rule (use actual expenses so long as the debt is paid within 60 months
    3. CSED if the case can be made (the IRS Revenue Officers have some discretion so long as it is a full-pay IA).

    I would propose whatever of the above is best for the client.

    Eric

    #35259
    Joseph Damiens
    Participant

    Eric,

    Will that 60-month rule apply to a payroll tax case? My current case has 60k worth of payroll tax debt. RO is requestioning all business income (from wife’s company) be applied to the payroll tax debt, approx 5600/mo (12-month payback). The husband and wife together personally owe an additional 1 million on top of the payroll.

    #35505
    Eric Green
    Keymaster

    Joseph,

    The 60 month rule can be used but its all in – income tax and civil penalties on the individuals.

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