Installment Agreement Codes on Your Transcript: Pending, Established, Defaulted

There is no single "installment agreement" transaction code on an individual account. Instead, the agreement shows up as a series of TC 971 action codes, payment lines and, sometimes, a user fee module. Once you know the pattern, you can tell from the transcript alone whether an agreement is pending, in effect or gone.

The action codes

Each also has a TC 972 reversal where 6209 says so. A TC 972 with action code 043, for example, reverses the pending status.

Pending: AC 043

A pending installment agreement matters because of levy protection. IRC 6331(k)(2)(A) says no levy may be made while an offer for an installment agreement is pending. Under IRC 6331(k)(2)(B), if the request is rejected, the bar continues for 30 days after rejection and, if an appeal is filed within those 30 days, while the appeal is pending.

Pending also matters for the collection statute. IRC 6331(k)(3) applies the statute suspension rule of IRC 6331(i)(5) to these periods, except for the period an agreement is actually in effect. In plain terms, the collection clock generally pauses while a request is pending and during the rejection and appeal periods, but not while the agreement is running.

So the TC 971 AC 043 date is worth writing down. It is the start of a period that changes both what the IRS can do and how much time it has.

Established: AC 063

Once an agreement is in effect, IRC 6331(k)(2)(C) continues the levy bar during the period it is in effect, and IRC 6331(k)(2)(D) extends it for 30 days after a termination, plus any timely appeal.

The action code 063 description, "Installment Agreement. FTP at ¼%," ties directly to IRC 6651(h). For an individual who filed the return on time, including extensions, the failure-to-pay penalty rate drops from 0.5 percent to 0.25 percent per month for any month an installment agreement is in effect. If you filed late, the reduced rate does not apply under the statute's terms.

Interest does not stop. IRC 6601(b)(1) determines the last date for payment without regard to any installment agreement, so interest continues to accrue on the unpaid balance.

Document 6209's collection status codes include IDRS status 60, "Installment," which "establishes active Installment Agreement" and suspends notices other than those for installment agreements. Its freeze table lists an installment status 60 module freeze released when the status changes. You may not see status codes on a taxpayer transcript, but a representative can.

The payments

Installment payments post as TC 670 subsequent payments. A steady series of TC 670 lines at regular intervals is what an active agreement looks like. Document 6209's designated payment code 10 identifies a "manually monitored installment agreement," and codes 50 and 51 identify user fee payments for origination and for reinstatement or restructure. Direct debit and reduced user fees have their own codes, 47 through 49.

If the payment pattern stops, look for the default codes below. If the payments continue but the balance is not going down as expected, compare the payment amount to the accruing interest and penalty.

Defaults: AC 163 and status 64

Action code 163 is "Out of installment status." Document 6209's status codes also describe IDRS status 61, suspended installment agreement, status 63, deferred installment agreement, and status 64, "Defaulted Installment Agreement," which "initiates a Notice of Default during weekly update and a TDA/BAL DUE eight cycles later."

In plain English, a default starts a notice, and if it is not cured, the account goes back into active collection. Document 6209 lists action code 646 for a taxpayer who "has used the second skip privilege" on an installment agreement, which tells you the IRS tracks missed payments, not just defaults.

The 30-day post-termination levy protection in IRC 6331(k)(2)(D), and any timely appeal, is the window to fix a default before enforced collection resumes.

User fees and their refund

Document 6209 says TC 971 action codes 082 and 083 for origination and reinstatement user fees manually establish a civil penalty module, MFT 13 or 55, for the fee. So a user fee may appear on a separate module, not on the tax year.

Low-income taxpayers may get the fee back. Document 6209 describes TC 766 with credit reference numbers 946 and 966 as reimbursements of the installment agreement user fee under the Bipartisan Budget Act of 2018, section 41105, for agreements entered into on or after April 10, 2018, and action codes 118 and 119 as fees subject to reimbursement upon completion. See TC 766 and TC 768.

Joint accounts

On a joint liability, one spouse may set up an agreement and the other may not. Document 6209 lists action code 107, indicating one spouse has requested an installment agreement, and says it will cause an MFT 31 module to be created. MFT 31 is the IRS's mirrored account that lets it treat each spouse separately on a joint liability. If you are separated or divorced and your transcript shows MFT 31 activity, the IRS has split the account for collection purposes.

A worked example

The first two lines are the pending and established codes. The payments arrive regularly. A failure-to-pay penalty still posts, because the penalty does not stop under an agreement; IRC 6651(h) only reduces the rate for timely filers. Then the agreement comes off. When you see a removal line, look for a default notice in the mail and for missed payments or a new balance on another year in the cycles just before it.

What the transcript does not show about your agreement

The transcript shows status and payments. It does not show the agreed monthly amount, the due date each month, or whether the agreement covers every year you owe. Keep the IRS letter or confirmation that sets the terms. When a payment posts to the wrong year, or a new balance appears that the agreement does not cover, the letter is how you prove what was agreed.

Also watch new years. A balance on a year that came after the agreement was set up is a common reason agreements end. Read every year's transcript, not just the ones in the plan.

Where an agreement can go wrong on the transcript

Here are four patterns to watch for when reading a payment plan account.

• Payments posting to the wrong year. The agreement covers several years, but payments land on one year while another keeps accruing. Check where each TC 670 posted.
• A new balance. A later year goes unpaid, the IRS treats the account as noncompliant, and the agreement comes off. The removal line on the old year is caused by the new year.
• An offset. A refund is applied to the balance with a TC 826 and TC 706. That helps the balance but does not replace a scheduled payment, so do not skip one because a refund was applied.
• A pending request that never became active. An AC 043 with no AC 063 after it means the agreement was never established. Find out why before you assume you are protected.

The collection statute and the agreement

IRC 6502(a)(2)(A) allows collection after the normal 10-year period where there is an installment agreement, but only within 90 days after the expiration of any period for collection agreed upon in writing at the time the agreement was entered into. If you signed a statute extension as part of an agreement, the transcript may show a TC 550, which Document 6209 describes as a waiver extension of the collection statute expiration date "to the date input."

Reading the collection clock across several years is covered in Diagnosing an IRS Case From Transcripts.

If you are thinking about a payment plan, the firm's main site has an overview of installment agreements. The transcript tells you whether the one you have is working.