[Federal Register Volume 62, Number 250 (Wednesday, December 31, 1997)]
[Proposed Rules]
[Pages 68241-68242]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-33790]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 301

[REG-100841-97]
RIN 1545-AU97


Agreements for Payment of Tax Liability in Installments

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Notice of proposed rulemaking.

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SUMMARY: This document contains proposed regulations relating to 
terminations of agreements for the payment of tax liabilities in 
installments (installment agreements). The proposed regulations reflect 
changes made to section 6159 of the Internal Revenue Code of 1986 
(Code) by the Taxpayer Bill of Rights 2. The proposed regulations 
provide a procedure for requesting an independent administrative review 
of an alteration, modification, or termination of an installment 
agreement.

DATES: Written comments and requests for a public hearing must be 
received by March 2, 1998.

ADDRESSES: Send submissions to: CC:DOM:CORP:R (REG-100841-97), room 
5226, Internal Revenue Service, POB 7604, Ben Franklin Station, 
Washington, DC 20044. Submissions may be hand delivered between the 
hours of 8 a.m. and 5 p.m.: CC:DOM:CORP:R (REG-100841-97), Courier's 
Desk, Internal Revenue Service, 1111 Constitution Avenue NW., 
Washington, DC. Alternatively, taxpayers may submit comments 
electronically via the Internet by selecting the ``Tax Regs'' option on 
the IRS Home Page, or by submitting comments directly to the IRS 
Internet site at <a href="http://www.irs.ustreas.gov/prod/tax____regs/
comments.html">http://www.irs.ustreas.gov/prod/tax____regs/
comments.html</a>.

FOR FURTHER INFORMATION CONTACT: Concerning the regulations, Kevin B. 
Connelly, (202) 622-3640 (not a toll-free number).

SUPPLEMENTARY INFORMATION:

Background

    This document contains proposed amendments to the Procedure and 
Administration Regulations (26 CFR part 301) relating to installment 
agreements under section 6159 of the Code. Section 201 of the Taxpayer 
Bill of Rights 2 (TBOR2), Pub. L. No. 104-168, 110 Stat. 1452 (1996), 
amended section 6159 to provide that the Secretary may not alter, 
modify, or terminate an installment agreement unless notice of such 
action is given not later than 30 days before the date of the action. 
The notice must explain why the Secretary intends to take the proposed 
action. Section 202 of TBOR2 provides that the Secretary shall provide 
an independent administrative review of the termination of an 
installment agreement upon request of the taxpayer. These proposed 
regulations reflect the change made by Section 202 of TBOR2. In 
addition, although the IRS rarely alters or modifies an installment 
agreement, the proposed regulations give taxpayers the right to an 
independent administrative review of alterations or modifications.

Explanation of Provisions

    Sections 201 and 202 of TBOR2 amended section 6159 of the Code with 
respect to installment agreements. Section 201 provides that the 
Secretary may not alter, modify, or terminate an installment agreement 
unless notice of such action is given to the taxpayer at least 30 days 
before the action. The notice must explain why the Secretary intends to 
take the proposed action. Notice is not necessary if collection of the 
tax to which the installment agreement relates is in jeopardy.
    Prior to the enactment of TBOR2, Section 6159 of the Code required 
notice only if the Internal Revenue Service intended to alter, modify, 
or terminate an installment agreement because of a change in the 
taxpayer's financial condition. Section 301.6159-1(c)(4) of the 
regulations that are being amended by this notice of proposed 
rulemaking, however, already requires 30 days notice whenever the IRS 
intends to alter, modify, or terminate any agreement, regardless of the 
reason for the action. The only exception to this rule is that no 
notice is required if collection of the tax to which the installment 
agreement relates is in jeopardy. In addition, existing paragraph 
(c)(4) requires the notice to explain the reason for the intended 
action. In light of existing paragraph (c)(4), the regulations do not 
have to be amended to reflect section 201 of TBOR2.
    Section 202 of TBOR2 provides that, upon request by a taxpayer, the 
Secretary shall provide an independent administrative review of the 
termination of an installment agreement. In addition, although the IRS 
rarely alters or modifies an installment agreement, the proposed 
regulations grant taxpayers the right to request an independent 
administrative review of alterations or modifications. Procedures for 
requesting an independent administrative review are contained in the 
proposed regulations.
    When the Internal Revenue Service intends to terminate an 
installment agreement, it currently sends the taxpayer a written notice 
of its intent. The notice (1) informs the taxpayer why the Internal 
Revenue Service intends to terminate the agreement, (2) notifies the 
taxpayer that the Internal Revenue Service intends to levy the 
taxpayer's property, (3) explains that the taxpayer has a right to 
request an independent review of the Internal Revenue Service's 
decision, and (4) tells the taxpayer to call the telephone number 
listed on the notice within 30 days of the date of the notice if the 
taxpayer wishes to stay collection and request the Internal Revenue 
Service to review its decision. If the taxpayer timely calls the 
telephone number listed on the notice, the employee attempts to resolve 
the case with the taxpayer. If the taxpayer and the employee are not 
able to resolve the case to the taxpayer's satisfaction, a conference 
is set up with a manager. If the manager and the taxpayer are unable to 
resolve the case, the manager forwards the case to Appeals for an

[[Page 68242]]

independent administrative review. Absent jeopardy, collection action 
is stayed until the appeals officer has informed the taxpayer of a 
decision.
    The proposed regulations provide that, if a taxpayer disagrees with 
a determination to alter, modify, or terminate an installment 
agreement, the taxpayer may initiate an independent administrative 
review of the determination by calling the telephone number listed on 
the notice within 30 days of the date of the notice. This will set the 
review process in motion.

Special Analyses

    It has been determined that this notice of proposed rulemaking is 
not a significant regulatory action as defined in EO 12866. Therefore, 
a regulatory assessment is not required. It also has been determined 
that section 553(b) of the Administrative Procedure Act (5 U.S.C. 
chapter 5) does not apply to these regulations, and because the 
regulation does not impose a collection of information on small 
entities, the Regulatory Flexibility Act (5 U.S.C. chapter 6) does not 
apply. Pursuant to section 7805(f) of the Internal Revenue Code, this 
notice of proposed rulemaking will be submitted to the Chief Counsel 
for Advocacy of the Small Business Administration for comment on its 
impact on small business.

Comments and Requests for a Public Hearing

    Before these proposed regulations are adopted as final regulations, 
consideration will be given to any written comments that are submitted 
timely (a signed original and eight (8) copies) to the IRS. All 
comments will be available for public inspection and copying. A public 
hearing may be scheduled if requested in writing by a person that 
timely submits written comments. If a public hearing is scheduled, 
notice of the date, time, and place for the hearing will be published 
in the Federal Register.

Drafting Information

    The principal author of these regulations is Kevin B. Connelly, 
Office of Assistant Chief Counsel (General Litigation) CC:EL:GL, IRS. 
However, other personnel from the IRS and Treasury Department 
participated in their development.

List of Subjects in 26 CFR Part 301

    Employment taxes, Estate taxes, Excise taxes, Gift taxes, Income 
taxes, Penalties, Reporting and recordkeeping requirements.

Proposed Amendments to the Regulations

    Accordingly, 26 CFR part 301 is proposed to be amended as follows:

PART 301--PROCEDURE AND ADMINISTRATION

    Paragraph 1. The authority citation for part 301 continues to read 
in part as follows:

    Authority: 26 U.S.C. 7805 * * *

    Par. 2. Section 301.6159-1 is amended by revising paragraphs 
(c)(4) and (g) to read as follows:


Sec. 301.6159-1  Agreements for payment of tax liability in 
installments.

* * * * *
    (c) * * *
    (4) Notice. Unless the director determines that collection of the 
tax is in jeopardy, the director will notify the taxpayer in writing at 
least 30 days before altering, modifying, or terminating an installment 
agreement pursuant to paragraph (c)(1) or (2) of this section. A notice 
provided pursuant to this paragraph must briefly describe the reason 
for the intended alteration, modification, or termination. If the 
taxpayer disagrees with the director's decision to terminate, alter, or 
modify the installment agreement, the taxpayer has the right to an 
independent administrative review. The taxpayer may initiate an 
independent administrative review by calling the telephone number 
listed on the notice within 30 days of the date of the notice. If, upon 
calling the telephone number listed on the notice, the dispute is not 
resolved to the taxpayer's satisfaction, the taxpayer must speak with a 
manager. If, after speaking with a manager, the dispute still is not 
resolved to the taxpayer's satisfaction, the taxpayer may request the 
Office of Appeals to independently review the decision. The Office of 
Appeals shall conduct a review to determine whether the facts and 
circumstances warrant the alteration, modification, or termination of 
the taxpayer's installment agreement.
* * * * *
    (g) Effective date. This section is applicable December 23, 1994, 
except that paragraph (c)(4) of this section is applicable on the date 
final regulations are published in the Federal Register.
Michael P. Dolan,
Deputy Commissioner of Internal Revenue.
[FR Doc. 97-33790 Filed 12-30-97; 8:45 am]
BILLING CODE 4830-01-U