Installment agreement rejection code should reverse with a 30-day effective date

Plain-English summary

Chief Counsel confirmed that the IRS may not levy while a proposed installment agreement is pending, for 30 days after rejection, or while a timely appeal is pending. The collection statute expiration date is suspended during the same period. IRS systems use a transaction code both to prevent levy and suspend the collection deadline. Although the Internal Revenue Manual instructs staff to reverse that code 45 days after rejection to allow time for mailed appeals, using the 45th day as the effective reversal date makes the system's collection deadline 15 days too late. The advice recommends retaining the 45-day processing wait but entering the reversal as effective 30 days after rejection.

Ruling snapshot

• Question: How should the IRS reverse the installment-agreement pending code after rejecting a proposed agreement without overstating the suspended collection period?
• Outcome: Advice given. Reverse the code after 45 days but use an effective date 30 days after rejection.
• Key authorities: IRC § 6331(k)(2)(B); IRM 5.14.1.3; IRM 5.14.9.8; IRM 5.19.1.5.4.7

Full text (IRS public release)

ID: CCA_2017040416063446
UILC: 6331.00-00

Number: 201721018
Release Date: 5/26/2017
From:
Sent: Tuesday, April 04, 2017 4:06:34 PM
To:
Cc:
Bcc:
Subject: Question regarding IRM 5.14.1 and IRC 6331

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You are correct that under section 6331(k)(2)(B), the Service is prohibited from levying on a taxpayer’s property while an offer for an installment agreement is pending and “if such offer is rejected by the Secretary, during the 30 days thereafter (and, if an appeal of such rejection is filed within such 30 days, during the period that such appeal is pending).” The CSED is suspended during this time as well. The TC 971 AC 043 that is input on a taxpayer’s account when the taxpayer submits an offer for an installment agreement both prevents levy and suspends the CSED in IDRS. See IRM 5.14.1.3(2)- (3); IRM 5.19.1.5.4.7(4) (“A systemic suspension of the CSED during the time a proposed IA is pending is built into MF processing and is triggered by the following dates . . . TC 971 AC 043 . . . .”). The 45-day time frame you pointed to in IRM 5.14.1.3(8)(b) for reversing the TC 971 AC 043 after a proposed installment agreement is rejected is designed to provide a 15-day window to allow for an Appeals request to come in with respect to a rejection decision. See IRM 5.14.9.8(2) (“Allow at least fifteen additional days after the thirty day period in case taxpayers mail requests for hearing regarding rejections [of proposed installment agreements].”). As you noted, however, when a Revenue Officer follows the instructions in the IRM and reverses the TC 971 AC 043 45 days after a proposed installment agreement is rejected, the resulting CSED computation in IDRS is off by 15 days. I have spoken with the author of IRM 5.14.1, and he is open to revising IRM 5.14.1.3(8)(b) and Exhibit 5.14.1-1(4)(a) to clarify that although the TC 971 AC 043 should be reversed 45 days after a rejection decision, the reversal should be input as of 30 days after the rejection. This should help ensure that the CSEDs shown in IDRS are accurate.

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