Negotiating a Payment Plan With an IRS Revenue Officer: Deadlines, Form 9297 and Form 433-D

Most payment plans are set up with a call center or a website. Some are not. When your case is assigned to a revenue officer, an IRS employee in Field Collection, the plan is negotiated with a person who has a caseload, a manager and a set of procedures that run on deadlines. You cannot use the online system for these cases; IRM 5.14.1.2 says Field Collection accounts in status 26 cannot set up a plan through the online payment agreement or the individual online account.

Field cases are not harder by nature. They are more structured. Understand the structure and you can use it.

The first meeting

A revenue officer will ask for full payment first. That is the procedure, not a negotiating stance. IRM 5.14.1.2 tells employees to request full or partial payment when taxpayers have the means to pay from income or equity, and to encourage payment as quickly as possible.

Then the revenue officer checks compliance. Every required return must be filed, and you must be current on withholding or estimated payments, or on federal tax deposits for a business, before any agreement can be approved. IRM 5.14.1.4.2 calls filing and payment compliance the prerequisite to any agreement. If returns are missing, you will get a deadline to file them, and your request will not be treated as pending until they are filed.

If you qualify for a guaranteed agreement or a Simple Payment Plan and ask for it, the revenue officer can grant it without a financial statement. If not, expect a complete collection information statement: Form 433-A for individuals, Form 433-B for businesses, or Form 433-F for individuals with only individual liabilities under $250,000. See the financial statement behind a payment plan.

Form 9297 and the deadline calendar

Revenue officers put their requests in writing on Form 9297, Summary of Taxpayer Contact. IRM 5.14.3.2 says requests for payments, documents, information and returns must be made on that form, which may be mailed, hand delivered or given to you in person. Each item comes with a date and a stated consequence for missing it.

The IRM's example shows what a calendar looks like. A taxpayer owes $200,000 and has two unfiled years. The revenue officer sets three dates: April 15 to file the current return or an extension with payment; April 22 to make a $5,000 payment and file the two missing returns; May 21 to deliver the proceeds of borrowing on or selling property with equity, or proof of two attempts to get an equity loan, plus two months of bank statements and another $5,000. The revenue officer explains the consequences and that the deadlines do not constitute an installment agreement.

Treat the Form 9297 as the most important document in your case. Put every date on your calendar. If you cannot meet one, ask for more time before it passes, and get the new date in writing.

Requested payments are not installment payments

Revenue officers often ask for a series of payments while the agreement is being worked out. IRM 5.14.3.2 makes a point many taxpayers never hear: acceptance of an agreement cannot be conditioned on receipt of a series of requested payments, and failure to make requested payments is not justification for recommending rejection. Installment payments are required only after an agreement is approved. If you miss a requested payment while your request is pending, the IRM says the agreement should still be considered on its merits, and still approved if you met everything else.

There is one exception, and it is important. Payments tied to equity, the sale or borrowing the revenue officer asked for, are different. If you fail to make an equity-based payment, rejection may be recommended. See will the IRS make you sell or borrow first.

Requested and voluntary payments can be designated, which IRM 5.14.3.2 notes is not true of installment agreement payments. If you are paying down a balance to cross a threshold, or want a payment applied to a particular period, designate it in writing.

What the revenue officer must tell you while you are pending

When requested payments are made while a request is pending, IRM 5.14.3.2 tells the revenue officer to advise you and document that an agreement is pending; that it must be approved by the group manager if applicable; that agreements are not granted until you receive written confirmation; that accepting payments is not acceptance of the agreement; that you will be told whether the request is accepted or rejected, with appeal rights before any enforcement; and that no levy action will be taken while the request is pending.

That last point is the statute at work. IRC 6331(k)(2) bars levy while a request is pending. See how a payment plan stops levies.

Assets, field visits and third parties

Revenue officers look at assets. IRM Exhibit 5.14.1-5 marks Must View Assets as yes for routine agreements, in-business trust fund agreements and partial payment agreements, and no for guaranteed agreements and both Simple Payment Plan types. That difference is one more reason to qualify for a simple plan if you can. If a field visit is part of your case, the revenue officer may want to see business equipment, vehicles or real estate listed on your financial statement.

Revenue officers may also contact third parties, such as employers, banks or customers, to verify information, but IRC 7602(c) requires advance notice to you before third-party contacts. The installment agreement procedures in IRM 5.14.10 refer to those requirements, for example before a payroll deduction agreement is mailed directly to an employer. If you would rather handle a contact yourself, say so early.

When things go sideways

• Missed deadline for documents or returns while pending: the IRM says you are told the agreement will be recommended for rejection, and the case goes to independent review. No collection action may be taken until the reviewer agrees, the rejection is communicated, and appeal timeframes have run. See rejection and independent review.
• No pending request yet: if deadlines pass without the items and you have no pending request, the IRM allows appropriate collection action once all required notices and appeal timeframes are satisfied.
• Repeated proposals that ignore the revenue officer's direction: that is one of the triggers for treating a request as made to delay collection.

Closing the agreement

Once approved, the agreement is put in writing. Treas. Reg. 301.6159-1(c)(2) allows either a document signed by you and the IRS or a written confirmation mailed or delivered to you. In practice, revenue officers generate Form 433-D, and the system produces Letter 2849 for direct debit agreements or Letter 2850 otherwise. IRM 5.14.1.4.4 notes it is the revenue officer's responsibility to mail or deliver those letters and document how. A direct debit agreement requires your signature on Form 433-D.

Read the Additional Conditions block on Form 433-D carefully. That is where a levy that stays in place, a lien that will be filed on default, scheduled payment increases, or other special terms are written. IRM 5.14.1.5 says an outstanding levy must be released once an agreement is approved, unless the agreement provides otherwise, and the place it provides otherwise is that block.

Non-simple agreements require the group manager's approval, and IRM 5.14.1.4.4 says to submit agreements for approval before any payments are due and to notify you if approval is delayed.

Working the case well

• Communicate in writing and keep copies of everything you send, with the date.
• File the missing returns first. Nothing moves until they are in.
• Make current-year estimated payments or deposits before the first meeting if you can.
• Bring a proposed payment you have tested with the payment plan calculator, and the documents that support your expenses.
• If you need to talk to a representative, say so. IRM 5.15.1 notes that if a taxpayer wants to consult a representative during an interview, the employee will suspend the interview to allow it.