5.19.13. Campus Procedures for Securing Financial Information

(1) The financial analysis provides the basis for determining a taxpayer’s ability to pay delinquent tax liabilities, which enables the Collection employee to make appropriate collection decisions to resolve the case.

(1) 26 C.F.R. 301.6343-1(b)(4) provides the authority to secure financial information from the taxpayer to determine ability to pay.

(2) IRC 6343 (a)(1)(D), requires a levy to be released when the Service determines the levy is creating an economic hardship, i.e., the levy will cause the individual to be unable to pay their reasonable necessary living expenses.

(3) Policy Statement P-5-71 provides the authority for reporting accounts currently not collectible (CNC). See IRM 1.2.1.6, Policy Statements for the Collecting Process. Accounts can be removed from active inventory after taking the necessary steps in the collection process.

(1) The Director, Collection Policy is the executive responsible for the policies and procedures to be employed by Campus Personnel.

(2) The campus team, department, and operation managers are responsible for ensuring the guidance and procedures described in this IRM are complied with.

(1) Program Reports: The following reports can assist with reviewing this type of workload.

• Embedded Quality Review System (EQRS) Reports.

• National Quality Review System (NQRS) Reports.

• AMS Reports.

• ACS Reports.

(2) Program Effectiveness: The program effectiveness is measured by the following review types and by level of management.

• Case reviews are conducted by campus managers to ensure compliance with this IRM.

• Annual Operational Reviews are conducted by department managers, operation managers, and campus director to evaluate program delivery and conformance to administrative and compliance requirements.

(1) Once financial information is provided, Compliance Services Collection Operations (CSCO) and Automated Collection Systems Support (ACSS) employees are required to control and work all cases to completion.

(1) The frequently used terms within this IRM along with their definition:

1. Allowable Living Expense. These provide for taxpayer’s and his or her family's, health/welfare and/or the production of income:

2. National Standards. A number of necessary expenses such as; Food, Housekeeping supplies, Apparel and Services, and Personal Care Products and Services:

3. Local Standards. These include housing, utilities, and transportation expenses for a taxpayer’s primary place of residence:

4. Six(6) Year Rule. All expenses may be allowed if taxpayer can full pay within six years:

5. One (1) Year Rule. Taxpayers who cannot full pay within six years may be given up to one year to modify or eliminate excessive necessary and/or non allowable conditional expense.

(2) This table lists most commonly used acronyms within this IRM.

(1) These are the financial information related resources:

1. IRM 5.19.1, Balance Due.

2. IRM 5.15, Financial Analysis.

3. SB/SE Allowable Expense Lookup Calculator Tool: http://mysbse.web.irs.gov/Collection/toolsprocesses/AllowExp/AllowExpCalc/default.aspx.

(2) All IRS personnel must be familiar with and responsible for execution of duties in accordance with taxpayer rights afforded by the provisions in the Internal Revenue Code, including the Taxpayer Bill of Rights (TBOR) listed in section 7803(a)(3). For additional information about TBOR, see https://www.irs.gov/taxpayer-bill-of-rights.

(3) IAT tools simplify processing by assisting the user with IDRS research and input. The tools also reduce the chance of errors and improve productivity. When an action must be taken and an IAT tool is available, Campus Compliance employees with access to IAT tools are required to complete the action using the IAT tool. See IRM 5.19.1.2.8, Mandated IAT Tools, for a list of mandated IAT tools.

(1) The table below provides guidance to all employees for when financial analysis is needed and when it is necessary to verify and obtain substantiation, by account balance and disposition type:

(1) The table below provides guidance to FA employees for when financial analysis is needed and when it is necessary to verify and obtain substantiation, by account balance and disposition type.

(2) NSIA:

(3) PPIA & CNC:

(1) The table below provides guidance to ACS, ACSS, and CSCO employees for when financial analysis is needed and when it is necessary to verify and obtain substantiation, by account balance and disposition type.

(2) NSIA:

(3) PPIA & CNC

(1) The table below provides guidance to ACS and ACSS employees for when financial analysis is needed and when it is necessary to verify and obtain substantiation, by account balance and disposition type.

(2) NSIA:

(3) PPIA & CNC

(1) Generally all household income is used to determine the taxpayer’s ability to pay. In cases where a liable taxpayer lives with a non-liable person refer to IRM 5.19.13.3.2.1, Shared Expenses.

(2) Income consists of:

• Wages,

• Interest and dividends (Schedule B, Interest and Ordinary Dividends),

• Net income from business (Schedule C, Profit or Loss From Business, Schedule E, Supplemental Income and Loss, and Schedule F, Profit or Loss From Farming),

• Net rental income (Schedule E, Supplemental Income and Loss),

• Pensions (Form 1099-R),

• Child support,

• Alimony, and

• Reverse mortgage payments.

(3) Wages include:

• Salary,

• Tips,

• Meal allowance,

• Parking allowance, and

• Any other money or compensation received by the taxpayer as an employee for services rendered.

(4) To calculate gross wages or salaries, take the following actions to ensure an accurate average monthly income (If AMS is not available):

(5) To determine disposable income, analyze a taxpayer's payroll deductions, ensuring they are reasonable and allowable. The only automatically allowable deductions from gross pay or income are:

• Federal taxes,

• State taxes,

• Local taxes,

• FICA,

• Medicare,

• Other mandatory retirement programs, and

• Health insurance.

(6) Other payroll deductions must meet the necessary expense test (seeIRM 5.19.13.3.2(1),Expenses Overview) and may not also be taken as an expense; for additional information, see IRM 5.19.13.3.2.2, Allowable Living Expenses.

(7) Include any interest and/or dividends the taxpayer receives or is credited to an account and can be withdrawn by the taxpayer and used for household expenses. The annual total should be divided by twelve to determine the average monthly income.

(8) If the taxpayer has self-employment (SE) income, it may be from Schedules:

• C

• D

• E

• F

• K-1

(9) If the SE schedules are complex, advise the taxpayer to complete the Form 433–A, Collection Information Statement for Wage Earners and Self-Employed Individuals, and provide a current Profit and Loss statement to the appropriate SBSE CSCO site: http://serp.enterprise.irs.gov/databases/who-where.dr/transshipment.dr/campus_locator_guide/25_csco_bal_due.htm. Provide the form or the web address of irs.gov to obtain the form.

(10) If verification is needed, use suggested methods for internal and external sources of information for financial verification. IRM 5.19.13.1.4, Verify Financial Statement.

(11) Net income from a business is the amount the taxpayer earned after paying ordinary and necessary business expenses. This amount may be determined from an analysis of the Schedule C, Profit or Loss From Business, from the prior year Form 1040, U. S. Individual Income Tax Return.Net Income from rental properties is the amount the taxpayer earned after paying ordinary and necessary rental expenses. This amount may be determined from an analysis of the Schedule E, Supplemental Income and Loss, from the prior year Form 1040, U. S. Individual Income Tax Return.

• If the net business is a loss, enter "0"; do not use a negative number.

• If the income is less than in previous years, ask the taxpayer to provide an explanation.

• Additional income may be found on Schedule D, Capital Gains or Losses, and Schedule F, Profit or Loss From Farming.

• Any depreciation, or amortization, should be added back into the Schedule C, Profit or Loss From Business, Schedule E, Supplemental Income and Loss, or Schedule F, Profit or Loss From Farming, net income. Depreciation or amortization expenses related to those assets, cannot be claimed

• Interest payments are allowable if they are paid by the taxpayer and not included in any other deductions allowed. Ensure business expenses are not also included in any other under personal expenses.

  Note: The taxpayer cannot claim the same vehicle expenses for both personal and business use (double dipping). If a vehicle is used for business and personal, determine the total cost of ownership and operating expenses for the vehicle. Deduct the amount already claimed on Schedule C, Profit or Loss From Business. The difference is the amount allowed on Forms 433–F, Collection Information Statement, or 433-H, Installment Agreement Request and Collection Information Statement, if it does not exceed the standard amount. If it exceeds the standard amount, the taxpayer would have to substantiate the additional amount as necessary for personal use.

(12) Although not all-inclusive, pensions include:

• Social security,

• IRA, and

• Profit sharing plans.

(13) Pensions could be used as an asset or as part of the income stream. See IRM 5.15.1.19, Business Expenses, and IRM 5.15.1.28(2)-(4), Retirement or Profit Sharing Plans.

(14) Child support includes the actual amount received in addition to other debts or bills the former spouse is paying. If the non-liable spouse is directly paying the medical expenses of the child, the liable spouse cannot claim the medical allowable living expense.

(15) Alimony includes the assigned payments made by the ex-spouse; however, consider if other bills are being paid by the ex-spouse, such as mortgage, and adjust the taxpayer’s expenses accordingly.

(16) Although the list below is not all-inclusive, other income could include:

• Payments from a trust account,

• Royalties,

• Renting a room,

• Gambling winnings,

• Sale of property,

• Internet sales, and

• Virtual Currency (e.g. Bitcoin, Ethereum, Litecoin, Ripple).

(17) Tax return information could include various sources of income. See Pub 17, Your Federal Income Tax For Individuals, Part 2, Income.

(1) Allowable expenses include those expenses that meet the necessary expense test. The necessary expense test is defined as expenses that are necessary to provide for a taxpayer's and his or her family's health and welfare and/or production of income. There are three types of allowable expenses:

• Allowable Living Expenses - based on National and Local Standards.

• Other Necessary Expenses - expenses that meet the necessary expense test, and are normally allowed.

• Other Conditional Expenses - expenses, which may not meet the necessary expense test, but may be allowable based on the circumstances of an individual case.

(2) Regardless of the necessary expense test, taxpayers may be allowed all expenses claimed, if the tax liability, including projected accruals, can be fully paid within six (6) years and within the CSED. See IRM 5.19.13.3.5, Full Payment in Six Years (6 Year Rule).

(3) If the taxpayer provides a payoff date for an asset, such as a vehicle, revise the IA amount in the future if an asset will be paid off in 12 months or less. Determine the number of months, plus one, and set the second IA amount to include the additional payment.

(4) In some cases, payments on expense items are not due in regular, monthly, increments. Calculate the average of expense items with varying monthly payments over twelve months, unless the variation is excessive.

(1) Verification and substantiation requirements vary based on both the proposed case resolution and the balance due on the account. See IRM 5.19.13.2, Authority Levels for Financial Analysis, Verification, and Substantiation .

(2) Compare the taxpayer’s financial statement to information obtained via internal sources. The use of the Corporate Files On-Line (CFOL) CC research (CC IRPTR, CC TRDBV and CC RTVUE/CC BRTVU) is required when validating financial income information the taxpayer provided. For a list of internal sources available for your use: see Exhibit 5.19.13-2, Verify Financial Statement.

(3) Verification of income through IRS research of internal sources is ONLY required when completing a financial statement input or on certain types of cases such as CNC accounts if the AAB (CC SUMRY) is above ≡ ≡ ≡ ≡ ≡ ≡.

(4) If verification is needed, use suggested methods for internal and external sources of information for financial verification. See Exhibit 5.19.13-2 , Verify Financial Statement.

(5) Paper substantiation from the taxpayer, faxed or mailed, is required:

• If the amount claimed for income or any expenses appears to be unreasonable (per employee judgment) or the expense amounts claimed exceed the ALE standards.

  Example: # A taxpayer and three dependents are living in a home with a $2,600 monthly mortgage in Philadelphia. The local housing standard for four family members in the taxpayer’s area is $1,813.  The taxpayer indicates the market value of their home is less than the mortgage balance. Since there is no equity to address and the expense was within 150% of the applicable standard, the information provided is sufficient and the expense can be accepted when determining either CNC or the taxpayer’s ability to pay on an NSIA or PPIA#.

  Example: # A taxpayer indicates a monthly out of pocket health care cost of $400. The out of pocket health care standard is $165 per month. This expense exceeds 150% of the applicable standard. With acceptable paper or verbal substantiation, the $400 expense can be included when determining either CNC or the taxpayer’s ability to pay on an NSIA or PPIA#.

(6) Examples of items which may be requested for substantiation of expenses over the standard or to verify other necessary expenses that do not appear on the taxpayer's wage and earning statement include, but are not limited to, copies of items such as:

• Bank statements or canceled checks, to prove child support payments are being made if they are not on the taxpayer's wage and earning statement.

• Credit card statements, to confirm payment of necessary expenses by credit card.

• Rent/lease receipts and lease agreements, only if the amount they claim is substantially over the standard and is going to be allowed if substantiated.

• Court orders and proof of payments, for child support or other court ordered payments that do not appear on the taxpayer's wage and earning statement.

• Future expenses.

  Example: The birth of a child or the necessary replacement of a car increases expenses.

• Payroll check stubs, if income or court ordered payments require verification.

(7) Substantiation of other necessary expenses may be required if the expense cannot be verified through internal sources.

(8) Any verbal/internal verification or paper substantiation received from the taxpayer must be clearly documented on the AMS financial screens. Substantiation of income and/or expenses can include, but is not limited to:

• Verbal information received during telephone contact with the taxpayer,

• Bank statements or canceled checks providing proof of payments being made,

• Credit card vouchers,

• Rent/Lease receipts and lease agreements,

• Payment coupons,

• Court order; must provide proof of payments,

• Contracts,

• Future expenses, or

  Example: The birth of a child or the necessary replacement of a car.

• Payroll check stubs with current year-to-date figures, Form 1099 s, Form 1040, U.S. Individual Income Tax Return, Form W-2, Wage and Tax Statement, etc.

(9) Send cases awaiting substantiation from the taxpayer:

• To the appropriate ACS inventory if an ACS case, or

• CC STAUP if in Notice Status.

• Field Assistance makes an appointment for the taxpayer to return to the TAC or advises the taxpayer to return to the TAC by a specific date.

(10) When obtaining documents for substantiation, ask the taxpayer for copies, not original documents. Telephone numbers of creditors and person to contact may be secured if verification is necessary.

1. If the taxpayer has the supporting documents available, encourage the taxpayer to fax the information while on the call. If faxing while on the call is not possible, give the taxpayer the appropriate ACSS address to mail the documents. Field Assistance must request the taxpayer return to the TAC with the documentation.

   Exception: Call site employees are to accept faxes during a call if a levy is in place.

   Note: If the taxpayer does not have the supporting documents available during the call, ask the taxpayer if they would agree to establish the IA at the higher monthly payment amount shown on AMS. Inform them when their substantiation is received we will make a determination if the documentation submitted supports allowing the additional expenses. If the documents support the lower IA amount, we will allow the lower monthly payment without incurring a re-structuring fee.

2. If the taxpayer claims immediate economic hardship from a levy, interview taxpayer to obtain financial information. Input to AMS Financial screens. Ask the taxpayer to fax all necessary supporting documentation while on the phone.

   Example: The taxpayer provides a financial statement, which shows they have no ability to pay. If the taxpayer claims any conditional expenses or expenses that exceed the ALEs, ask the taxpayer to fax the necessary supporting documentation. Once it is received and you verify that it supports the taxpayer's financial statement, then release the levy. See IRM 5.19.4.4.10, Levy Release: General Information. See IRM 5.19.17.2.4, CNC Unable to Pay – Hardship, to report the account CNC due to hardship.

   Example: The taxpayer provides a financial statement, which shows they have an ability to pay of $100 per month, and they didn't claim conditional expenses or expenses that exceeded the ALEs. However, the taxpayer is experiencing an immediate economic hardship (they received a cut-off notice from their electric company.) Ask the taxpayer to fax the disconnect notice. Once it is received and you verify it supports the taxpayer's claim of economic hardship, then release the levy in full or in part to relieve the immediate economic hardship. See IRM 5.19.4.4.10, Levy Release: General Information. See IRM 5.19.1.6.4, IAs, or IRM 5.19.1.6.5, PPIA, to establish an IA or PPIA.

3. If substantiation is mailed, provide the taxpayer with the appropriate deadline to return information and the appropriate ACSS address. Generally, the taxpayer should be allowed no more than 30 days to provide requested substantiation. However, actual deadlines may vary, based upon the taxpayer’s circumstances and the information requested. Some appropriate deadlines are:

   Example: Ten days to get substantiation for documents that may be readily available, such as, court-ordered, student loan, state tax or medical payments. (You may need to allow additional time if the taxpayer states the documents are not readily available.)

   Example: 30 days if the taxpayer is attempting to borrow.

   Note: Add 15 calendar days to the due date given the taxpayer.

   Example: The number of follow-up days is the number of days given as the due date, 30 days if the taxpayer is attempting to borrow, plus 15 additional days ensuring we receive the correspondence; the correct follow up date is 45 days from today.

(11) If the taxpayer does not respond by the follow up date, take the following actions:

1. If the original IA request met Pending IA criteria and additional information was not received, follow rejection procedures. For Pending IA criteria, see IRM 5.19.1.6.4.7, Pending IA Criteria. For Rejection procedures, see IRM 5.19.1.6.4.9, IA Rejection Criteria.

2. If the original IA request did not meet Pending IA criteria and additional information was not received as requested, allow the account to continue with normal collection activity.

3. If the account is in Notice Status, input CC STAUP 2200.

4. If the account is in ST 22, proceed with the next case action.

   Example: Levy, NFTL, LT11, Final Notice -- Notice of intent to levy and your notice of a right to a hearing (sent certified, return receipt requested), etc.

(12) If a taxpayer calls or writes with additional financial information, or requested substantiation, you are not required to repeat the tiered interview if it was previously documented clearly.

1. If financial information is on AMS and was obtained within the last twelve months, you are not required to take a complete financial statement. Review and update the previous financial information obtained, DO NOT refer the taxpayer to the employee originally taking the financial information. AMS recalculates the payment amount. Ensure requirements are met, and continue the financial statement interview.

2. When ACSS or CSCO receives documents to support a financial statement and clarification or additional documentation is needed for case resolution, attempt to contact the taxpayer by phone or issue the appropriate Correspondex letter requesting the additional needed documentation; advise the taxpayer to respond within 30 days and allow 45 days for follow up. Follow procedures in IRM 5.19.13.3(11), Securing Financial Statements.

(13) If the taxpayer is still missing any required information, do not give more opportunities to provide the missing documentation. Document this action accordingly and take the next appropriate action.

(1) The analysis of the taxpayer’s financial condition provides a basis for making one or more of the following decisions:

1. Request payment in full or a partial payment based on the liquid equity in available assets,

2. IA. See IRM 5.19.1.6.4, IAs,

3. PPIA. See IRM 5.19.1.6.5, PPIAs,

4. CNC. When financial analysis indicates no means of payment, see IRM 5.19.17.2, Currently not Collectible (CNC) Procedures, or

5. OIC. For OIC information, see IRM 5.19.17.3, Offer in Compromise (OIC) Procedures.

• Is the government’s interest in assets protected?

• Will the value of assets increase or decrease?

• Will the taxpayer’s interest in assets change?

(2) Request immediate full payment if the completed financial statement shows the taxpayer has the ability to borrow or liquidate such as:

• The taxpayer has cash equal to the tax liability.

• The taxpayer has unencumbered assets, equity in encumbered assets, interest in estates and trusts, and lines of credit from which money may be borrowed to make payment in full.

• The taxpayer has other assets which may be pledged or readily converted to cash.

• Stocks, Certificates of Deposit, IRAs, and some 401(k) retirement plans can be liquidated or borrowed against

• Virtual Currency which includes cryptocurrency (e.g. Bitcoin, Ethereum, Ripple, and Litecoin)

(3) If liquidation of any asset(s) or equity in an asset will result in full pay or a substantial partial payment, explore the option with the taxpayer unless,

• Factors such as advanced age, ill-health, or other special circumstances are determined to prevent the liquidation of the assets, and/or

• They qualify for Guaranteed, Streamlined, or In-Business Trust Fund agreements.

(4) Before a complete determination can be made, ALL financial statement information provided by the taxpayer must be input to AMS. Consider whether the financial statement shows that the taxpayer has either assets to full pay or sufficient equity to borrow. AMS Financial screens perform systemic calculations to assist you with determining an accurate final case disposition. See IRM 5.19.13-3, AMS Financial Statement Processing.

• Base the case resolution decision on the amount of disposable household income available to apply to the tax liability.

• Gross income less allowable expenses equals disposable income.

• If expenses exceed income, ask the taxpayer for an explanation.

• Document all case actions including any deviation from the systemic calculations on AMS. If processing cannot be completed, and a resolution determined, the documentation will be required at a future date for case resolution. Documentation will also prevent unnecessary contact with the taxpayer.

(5) If the taxpayer agrees to an initial Voluntary Lump Sum Payment (VLSP) reducing the AAB (CC SUMRY) to an amount fitting Streamlined IA criteria, see IRM 5.19.1.6.4.21, VLSP.

(6) Consider the one-year and or six (6) year rule when arriving at an appropriate amount based upon the individual taxpayer’s financial information. See IRM 5.19.13.3.5, Full Payment in Six (6) Years (6 Year Rule), and IRM 5.19.13.3.6, Eliminating Excessive Expenses Within One Year.

• If the taxpayer claims conditional expenses and meets the six (6) year rule or the one-year rule, grant the IA.

• If the taxpayer claims conditional expenses but does not meet the six (6) year rule or one-year rule, request the higher payment amount determined through financial analysis. If the taxpayer does not agree, then follow Independent Review procedures. See IRM 5.19.1.6.4.9, IA Rejection Criteria.

(7) Emphasize to the taxpayer how much we expect them to pay, rather than how we expect them to spend their money:

1. Do not inform the taxpayer they cannot own, for example, a boat or summer cabin.

2. Tell the taxpayer they are responsible for determining what modifications or eliminations must be made to their expenses in order to pay their tax liabilities.

(8) If the taxpayer refuses to liquidate or borrow against assets (and the circumstances in paragraph (3) above do not apply), and the request meets Pending IA criteria,IRM 5.19.1.6.4.7 , Pending IA Criteria, then follow Independent Review procedures. See IRM 5.19.1.6.4.10, Rejected IA Independent Review.

(9) If the taxpayer requests a DDIA, follow IRM 5.19.1.6.4.13, DDIA. If the taxpayer requests a PDIA, follow IRM 5.19.1.6.4.14, Form 2159, Payroll Deduction Agreement.

(10) If the financial analysis shows that the taxpayer has no ability to pay, but the taxpayer requests an IA, establish the requested NSIA or PPIA with a back up CNC.

(11) All case resolutions determined using financial statement processing to determine the taxpayer’s ability to pay require managerial approval and NFTL determination, when appropriate. See IRM 5.19.13.2, Authority Levels for Financial Analysis, Verification, and Substantiation.

(12) If a determination is made not to file the NFTL, follow IRM 5.19.4.5.2, Do Not File Decisions.

(13) For additional information, see IRM 5.19.13-1, Questions and Answers to Assist in Financial Statement Processing.

(1) When a taxpayer is unable to full pay immediately and a non-Streamlined IA is being considered, the taxpayer may qualify for the six (6) year rule. All expenses may be allowed if:

1. The taxpayer establishes they can stay current in all tax requirements.

2. Tax liability, including projected accruals, will be paid within six (6) years AND the liability will be full paid within the CSED.

3. Amounts are reasonable.

   Example: The taxpayer is currently making $4,000 a month car payments on a $200,000 car. Even though the tax liability will be paid within the six (6) years, the expense is not reasonable. If the additional expenses are reasonable, they may be allowed.

   Reminder: Do not tell the taxpayer how to spend their money; it is up to the taxpayer to determine how to meet their expenses based on what their statement allows.

4. If the financial statement shows the taxpayer cannot full pay within six years, the amounts allowed for one or more conditional expense items may be reduced so the liability can be full paid within six years, if the taxpayer concurs.

5. Taxpayers are required to provide financial information in these cases, but do not have to provide substantiation of reasonable expenses.

(2) Use IAT Compliance Suite Payment Calculator, IDRS CC ICOMP F or Decision IA to compute the projected accruals to ensure the six (6) year rule is met and the liability will be full paid within the CSED.

(3) If the taxpayer can pay the entire tax liability including the projected accruals within six (6) years AND within the CSED, all expense(s) (including minimum credit card payments) may be allowed.

• The necessary expense test of providing for a taxpayer and their family’s health and welfare or the production of income is not necessary.

• Substantiation is not required. Refer to IRM 5.19.13.3.2.7(1), Conditional Expenses. See IRM 5.19.13.3.3, Asset/Income/Expense Verification and Substantiation.

(4) Excessive necessary and non-allowable conditional expenses incurred after the assessment of the tax liability are not covered by the six (6) year rule. If you feel a taxpayer acted to reduce their ability to pay, enforcement action against the post-assessment assets or not allowing the expenses may be appropriate.

(1) Taxpayers who cannot full pay their accounts within six (6) years may be given up to one year to modify or eliminate excessive necessary and/or non-allowable conditional expenses. By modifying or eliminating some conditional expenses, a taxpayer may fall within the six (6) year limit to full pay their liability; this enables a taxpayer to retain some conditional expenses. When allowing the one-year rule, the IA must still full pay within a total of 72 months (six (6) year rule).

(2) For a determined period of time, not to exceed one year, an IA is established for an amount, even if minimal, which can be paid until the date the excessive or non-allowable expenses are modified or eliminated. The taxpayer must agree to the increased payment amount.

(3) An IA must include a payment increase at the date a taxpayer is expected to modify or eliminate excessive necessary or non-allowable conditional expenses.

(4) Taxpayers are responsible for determining how best to adjust or eliminate expenses.

(5) If the taxpayer was given a year to eliminate conditional expenses, fails to adjust the expenses and the account defaults, do not automatically allow the additional expenses. If the taxpayer contacts IRS requesting additional time, grant additional time only in an unexpected or unusual circumstance or based on a change in their financial condition such as loss of a job or birth of a child, etc.

(6) Document the basis for the exception. Normally, the one-year rule is only given once. If the taxpayer did not reduce the expenses as promised, do not allow the additional expenses again unless there are unusual circumstances. AMS comments must be documented. Always save and create history.