Department of Taxation and Finance

Tax Compliance Division: Installment Payment Agreement Program

In certain circumstances, the Department of Taxation and Finance may permit taxpayers to pay overdue taxes in installments. During the year ended March 31, 1995, the Department agreed to about 72,000 installment payment plans involving about $360 million. We examined the controls over the installment agreements and found that certain improvements are needed. For example, the Department has not developed a system for evaluating the effectiveness of the agreements in collecting unpaid taxes. When we analyzed data relating to the agreements over a five-year period, we found that while the use of the agreements had become more common, the collection rate for installment payments had declined and the rate of default had increased. We also noted that, until our audit, the Department had not actively monitored for fraud and other misconduct in the use of installment agreements. However, during our audit, Department officials identified three instances of misconduct, in which Department employees had approved installment agreements for themselves, relatives or co-workers. We recommend several actions that can be taken to improve the administration of the installment agreements.

For a complete copy of 95-S-131 click here.
For a copy of the associated follow-up report click here.
For a copy of the 90-day response click here.