June 15, 2020

How Do I Know If My Installment Agreement Was Accepted; IRS Just Sent Me Letter 2273C.

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How Do I Know If My Installment Agreement Was Accepted; IRS Just Sent Me Letter 2273C.

The IRS goes through a series of notices regarding Installment Agreement, from Cold (barely on the radar) to Smoldering Hot (requires immediate attention). Check out the links to learn more:

Form 9465 Installment Agreement Request - Not too scary (Cold).
Form 433D – Installment Agreement- Direct Debit Payment Authorization- Still pretty cool (Getting warmer).
Letter 2273C- Installment Agreement Acceptance. Warm, this is a good thing
CP 89- Annual Installment Agreement Statement – Statement of payments made. Good, this means your Installment Agreement is in good standing
Letter 2272C- Installment Agreement Cannot Be Considered. Smoldering hot—act now or lose your due process rights (your right to a hearing, reinstatement of the Installment Agreement and to stop collections)
CP 522- We’re Reviewing Your Installment Agreement- Smoldering hot- This likely means that the IRS believes that your monthly payment should increase. You absolutely must respond.
CP 523 – Intent to Terminate Your Installment Agreement and Seize (Levy) Your Assets- Red hot- The IRS will terminate you Installment Agreement unless you do something- act now or lose your due process rights (your right to a hearing, reinstatement of the Installment Agreement and to stop collections)

Form 2273C is to inform you that your Installment Agreement Request has been approved. Generally, the IRS sends this form to formally grant your Installment Agreement and explain the terms of the agreement. It is the third notice/form in the Installment Agreement series.

What can I expect because of this notice?

Form 2273C is the approval of the Installment Agreement and comes with certain terms and conditions for the agreement to stay in place.

What You Must Do

You must meet all conditions of your installment agreement. If you don't, the IRS can cancel it and take enforcement action to collect the full amount of your tax liability. Enforcement action could include filing a Notice of Federal Tax Lien (which notifies your creditors of a lien against your property) or placing a levy on your wages or bank accounts. If the IRS cancels your installment agreement and you later apply for and receive reinstatement, you'll have to pay a reinstatement fee.

The other conditions of this agreement are:

You file and pay on time all federal and state taxes due during the term of this agreement.

The IRS will apply all installment agreement payments to the oldest tax assessments first, then penalties, then interest on that assessment.

You must pay all installment agreement user fees.

You must provide a current financial statement when they request one. If you have a change in your ability to pay, the IRS can revise or cancel your installment agreement.

In about eight weeks, you'll receive a notice showing the tax, penalty, and interest you owe. The notice will ask for payment of the total amount. The law requires the IRS to send this notice on overdue accounts and to use the word "demand" when requesting payment.

Because they already granted you an installment agreement, you don't need to respond to this notice.

They will send you a monthly statement with a payment voucher and return envelope shortly before each payment is due. The statement will show your remaining balance, as well as your monthly payment amount. The IRS must receive your payment by the due date. If you do not receive your statement at least 10 days before your payment due date, you should mail them your payment with a copy of the last page of the letter received.

Make your check or money order payable to the United States Treasury and provide on each payment:

- Name

- Address

- Social security or employer identification number

- Daytime telephone number

- Tax year

- Tax form

Please use the return envelope provided with your statement.

If you move, complete Form 8822, Change of Address, or for business address changes, complete Form 8822-B, Change of Address - Business, and send it to the IRS for processing.

The IRS will apply any refunds you're due to the amount you owe until you pay your balance in full.

A refund payment is not a substitute for a monthly payment. You must still make your regular monthly payment if the IRS applies a refund to your account.

The IRS will have provided a general explanation of the possible penalties and/or interest included in the current balance due on your account. If you would like a specific explanation of how the amounts were computed on your account, please contact the IRS at the toll-free number shown in the letter and they will send you a detailed computation.

Filing and/or Paying Late—IRC Section 6651

The IRS charges a %5 penalty for filing late, and a ½% penalty for paying late, when a return is filed late, and the tax is not paid by the date it was due. When both penalties apply for the same month, the penalty for filing late is reduced by the amount of the penalty for paying late for that month.

The penalty for filing late is based on the tax ultimately due, which was not paid by the original return due date without regard to extensions.

The penalty for paying late is based on the net unpaid tax at the beginning of each penalty month following the payment due date for that tax.

The penalties are charged for each month or part of a month the return or payment is late; however, neither penalty can be more than 25% in total.

Income tax returns are subject to a minimum penalty if filed late and received more than 60 days after the due date. The minimum penalty is $135 ($100 for returns due before 1/1/2009) or 100% of the tax paid late, whichever is less.

The penalty for paying late applies when tax is paid late, even if the return was filed on time. The due date for payment of tax shown on a return generally is the return due date without regard to extensions. Increases in tax must be paid within 21 days of our notice demanding payment (10 business days if the amount in the notice is $100,000 or more).

If the IRS issues a Notice of Intent to Levy and the balance due isn't paid within 10 days from the date of the notice, the penalty for paying late increases to 1% per month.

For individuals who filed on time, the penalty decreases to 1/4% per month while an approved installment agreement with the IRS is in effect for payment of that tax.

Interest—IRC Section 6601

The IRS is required by law to charge interest when you do not pay your liability on time. Generally, they calculate interest from the due date of your return (regardless of extensions) until you pay the amount you owe in full, including accrued interest and any penalty charges. Interest on some penalties accrues from the date we notify you of the penalty until it is paid in full. Interest on other penalties, such as failure to file a tax return, starts from the due date or extended due date of the return. Interest rates are variable and may change quarterly.

What can I expect next after this notice?

Since your Installment Agreement has been accepted, if everything goes along smoothly, you will receive a CP 89- Annual Installment Agreement Statement, indicating you are in good standing and the payments that have been made.

If the IRS detects that your income has increased or they feel they want to review your ability to pay, they will send you CP 522- We’re Reviewing Your Installment Agreement. You absolutely MUST respond to the CP 522 or your Installment Agreement will be in jeopardy of default and you will receive CP 523 – Intent to Terminate Your Installment Agreement and Seize (Levy Your Assets.

What are my options?

What is my first step?

If you received a letter or notice, a decision must be made. Do you feel confident to handle this situation on your own? If it is a simple issue and you already know the answer, call, or write them. If the issue is more complicated, you need to hire a Certified Tax Resolution Specialist. The IRS or State will take full advantage of your lack of knowledge and experience.

What is Your Next Step?

The next step is to determine if the notice was sent in error. Do you have an outstanding tax liability? Do you have unfiled or incomplete returns?

Is There a Time Limit?

Yes! Each letter or notice from the IRS or State will indicate a date that you MUST contact them by. If you need more time, call the number on the notice or letter, and request an extension. DO NOT ALLOW the time to expire without contacting them or hiring a representative to contact them for you.

What You Don’t Want to Do!

What you don’t want to do is nothing. Your tax problems will only get worse if you ignore them. If you cannot pay, there are a number of potential solutions available to those who are otherwise in compliance. In compliance means having all tax returns filed and any balances paid or on a payment plan. If you have outstanding debts or unfiled returns, you need to get hire a Certified Tax Resolution Specialist.

Get Some Help

If you don’t know how to address the issue(s), have unfiled returns/unpaid balances or just don’t feel confident, let the experts at Legacy Tax & Resolution Services represent you. Work with our team of Certified Tax Resolution Specialists to resolve your issue(s) quickly. Best of all, you don’t have to talk to the IRS or State; we can speak on your behalf.

Stop the stress and resolve your problems Call 800-829-7483 TODAY