TAP 106-022

CP 521 Interest Rate

Issue Statement:

Taxpayers on monthly installment agreements with the Internal Revenue Service (IRS) are not always aware of how much penalty and interest is being assessed and paid.  Paying through installments to the IRS is costly for taxpayers and many do not have a clear picture of the true cost of their particular installment plan.

Goal Statement:

Encourage taxpayers currently in installment agreements with the IRS to use more cost-efficient tools to pay off their tax liability.

Proposal:

The IRS should alter the CP-521, Installment Agreement Reminder Notice, to show a monthly breakdown of interest and penalty paid that follows the method being used by most mortgage and credit card companies.

One way the IRS could accomplish this is by using a payment breakdown on the CP-521 similar to the following example: