Tax Administration: Administrative Improvements Possible in IRS' Installment Agreement Program
GGD-95-137
Published: May 02, 1995. Publicly Released: May 02, 1995.
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Highlights
Pursuant to a congressional request, GAO reviewed the Internal Revenue Service's (IRS) Installment Agreement Program, focusing on the: (1) increase in installment agreements since IRS streamlined the processing and approval of taxpayers' requests for installment agreements; (2) effects these changes had on IRS collection activities; (3) internal auditors' concerns regarding these changes; (4) information that IRS provides taxpayers on their liabilities under installment agreements; and (5) administrative practices that could improve the installment agreement program.
Recommendations
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Internal Revenue Service | The Commissioner of Internal Revenue should notify taxpayers about projected total costs and payoff periods when setting up agreements with taxpayers and when mailing monthly reminder notices. |
IRS recently included an interactive installment agreement process as part of its World Wide Web page. The process allows taxpayers to determine whether they are eligible to enter into an installment agreement and, if so, helps them to calculate the estimated total cost of the agreement. To use the process, the taxpayer enters the total amount of tax owed, indicates whether payment can be made within 60 months, and enters the amount he can afford to pay each month. The calculator then tells the taxpayer the number of months it will take to pay off the amount due including the prevailing rate of interest.
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| Internal Revenue Service | The Commissioner of Internal Revenue should experiment with Form 9465 to test whether having space for taxpayers to authorize direct debit installment payments increases the frequency with which this option is used. |
Form 9465, Installment Agreement Request, dated January 1996, gives taxpayers the option of requesting a direct debit installment agreement via a checkoff box.
|
| Internal Revenue Service | The Commissioner of Internal Revenue should send agreement default notices to taxpayers by regular mail instead of certified mail unless an account is being referred for levy action. |
IRS management determined that it was not feasible to implement this recommendation.
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Topics
Collection proceduresCost controlDebt collectionDelinquent taxesGovernment collectionsInstallment paymentsTax administrationTaxpayersTaxesInternal auditors