CCA 200909053: Accruals are excluded from guaranteed installment agreement limit

Plain-English summary

Chief Counsel considered whether accrued interest and penalties should count when the IRS evaluates collection alternatives. The email says the IRS may generally choose whether to include accruals in currently-not-collectible and ordinary installment-agreement criteria, and should state that choice in its manual. Guaranteed installment agreements are different. Section 6159(c)(1) expressly measures the $10,000 liability limit without interest, penalties, additions to tax, or additional amounts, so those accruals cannot be included in that eligibility calculation.

Ruling snapshot

• Question: Should accrued interest and penalties count in collection-status and installment-agreement eligibility calculations?
• Outcome: Advice given: the IRS has discretion generally, but must exclude accruals for guaranteed installment agreements.
• Key authorities: IRC § 6159(c)(1).

Full text (IRS public release)

ID: CCA_2008121211300816 Number: 200909053
Release Date: 2/27/2009
Office: --------------
UILC: 6152.00-00 R 1986

From: ----------------------
Sent: Friday, December 12, 2008 11:30:10 AM
To: ------------------------------
Cc: -------------------------------------------------------------------------------- Subject: RE: AAB or AAB Plus Accruals?

------------

With one exception (see next paragraph), nothing in the law (cases, statutes, regulations, or IRM) prohibits or specifically instructs the IRS to include accruals (interest and penalties) in determining CNC status or IA options. In general, the IRS determines the procedures and criteria for determining the IA options available to a taxpayer. Similarly, the IRS sets the criteria for CNC determinations. The IRM should be revised to reflect the decision to include or exclude accruals in both the CNC and IA situations. But the choice remains with the Service.

However, the Internal Revenue Code clearly sets the criteria for guaranteed installment agreements. The Code expressly provides that "the aggregate amount of such [tax] liability (determined without regard to interest, penalties, additions to tax, and additional amounts) [can] not exceed $10,000." I.R.C. § 6159(c)(1). Thus, in situations in which the IRS is determining a taxpayer's eligibility for a guaranteed installment agreement, the IRS cannot include accruals.

Please let me know if you have any questions. Have a wonderful day!

--------------------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------------------------
-----------------