Tax Court Approves IRS Denial of Installment Plan Request

The IRS has shown increasing willingness to work out installment agreements with individuals and business entities that could not meet their tax obligations. But that doesn’t mean you can shirk your current responsibilities. Accordingly, in a new case, Coastal Luxury Management, TC Memo 2019-43, 4/29/19, the Tax Court upheld the IRS’ refusal to approve an installment agreement for unpaid payroll taxes.

By Ken Berry

The IRS is vigilant about pursuing payroll tax debtors. In fact, under the “trust fund penalty,” it may impose tax liability for the full amount of back taxes on a responsible person, such as a business owner. However, a tax debtor may arrange an affordable payment plan with the IRS if these six requirements are met:

1. The taxpayer files any outstanding employment tax returns. You may not negotiate your delinquent tax balance unless all tax returns have been filed.

2. The taxpayer makes all current quarterly payroll tax deposits. You can’t negotiate your balance if you have payroll tax deposits that have not been made for the current quarter.

3. The taxpayer completes Form 433-B, Collection Information Statement for Businesses. This financial information form is required to negotiate a payment arrangement to satisfy…

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