Installment agreements provide some tax relief if a liability cannot be paid in full. As you may know, IRS procedures prohibit the filing of levies while an installment agreement (IA) is in effect. But did you know that, subject to certain exceptions, no levies may be filed in any of the following situations either?
1. While requests for installment agreements are pending
2. For 30 days after requests for installment agreements are rejected
3. For 30 days after installment agreements are terminated
4. While an appeal of a default, termination, or rejection is pending or unresolved (See Internal Revenue Manual 188.8.131.52)
What are some of the exceptions, you ask? One is when the taxpayer waives the particular restriction in writing. Another exception is when collection of the tax is in jeopardy (i.e., taxpayer is preparing to leave the country with a suitcase full of cash). And a third exception is when a levy is filed in connection with a tax balance from one or more years not covered by the IA or appeal.
And what qualifies as a “pending” IA? Another good question. A taxpayer must at least provide his identifying information, such as name and social security number, identify the tax period(s) to be covered by the agreement, and propose an amount to be paid. However, an IA will not be deemed “pending” if all back tax returns are not filed or if it is evident that the IA request was submitted solely to delay collections. See Internal Revenue Manual 184.108.40.206.