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Tuesday, February 18, 2003


Drina L McCorkle claimed the IRS abused its discretion in denying her proposed installment agreement. She is a self-employed realtor whose income fluctuates considerably. She proposed a �pay as she can� installment agreement whereby several months� expenses would be deducted from each commission check and the remainder given to the IRS. IRS rejected this plan, and Tax Court upheld.

Tax Court is undoubtably right that Ms. McCorkle�s non-compliance with her estimated tax payments at the time of rejection of the installment agreement was a good reason for the rejection. But I was troubled by Tax Court�s approval of the IRS�s further reasoning that (1) the proposed installment agreement would be difficult to monitor and (2) the proposed installment agreement would not guarantee full payment within the period of limitations for collections. Yes, these would be considerable problems for the IRS, and rejections on these grounds would not rise to height of an abuse of discretion. But that does not make these good reasons. How else is someone with considerable fluctuations of income supposed to make an installment agreement? And isn�t monitoring it the IRS�s problem? And can you not agree to waive a period of limitations in an installment agreement?

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