On the September edition of Tax Talk Today, a Webcast program co-sponsored by the IRS, tax experts discussed the online payment agreement, the newest option for reaching an agreement with the IRS regarding a tax obligation.

The online payment agreement, which is currently available for use by tax practitioners on behalf of their clients, will eventually be accessible to all taxpayers via the IRS Web site. It applies to individual tax obligations and assessments totaling up to $25,000 that will be paid in full within five years. Amounts due and available payment options can also be reviewed online, and an online payment calculator helps determine acceptable payment agreements based on income and expenses. A $43 user fee, which is required to put the installment agreement in place, will be applied out of the taxpayer's first payment.

"The tax professional community really has helped us to develop this program," said Frederick Schindler, director, Collection Policy, Small Business/Self-Employed Division, IRS.

Tax practitioners who have a Power of Attorney recorded with the IRS will be able use the online payment agreement option on behalf of their clients. "It will allow us to do what normally would have taken hours on the phone literally in minutes," said E. Martin Davidoff, CPA, esq., chairman and founder, American Association of Attorney-Certified Public Accountants (AAA-CPA) IRS Tax Liaison Committee.

Another recent development in collection is the 20 percent deposit required for all-cash offers in compromise. According to Roger Harris, EA, president and COO, SmallBizPros, an expected benefit of this new requirement is that taxpayers will be less likely to submit offers without proper care.

"Now that you have to put that kind of money with the offer," said Harris, "I think you're going to pay a little more attention."

If the offer in compromise is in installments, there is no deposit, but payments must begin immediately.

The panel also noted that the use of private collection agencies has begun, with IRS letters going out to taxpayers just last week. For any case assigned to a private collection agency, taxpayers maintain the same rights afforded them under IRS collection activities. A taxpayer who would prefer to deal directly with the IRS rather than the private collection agency can ask that the case be returned to the IRS. To do so, they must inform the private collection agency of this desire in writing.

The IRS is using the National Research Program (NRP) to help identify ways to close the tax gap. According to the most recent NRP information, misreported business income and the related self-employment tax represents 42 percent of the estimated tax gap. This means that tax practitioners may see a rise in total examinations for their clients who are in the areas with low compliance rates based on the estimated tax gap.

Joseph Wilson, director, Examination Planning and Delivery, Small Business/Self-Employed Division, IRS, indicated that the IRS will be taking a closer look at "sole proprietorships where there is the relatively low reporting rate on business income and self- employment tax."

A full transcript of this month's Webcast -- titled "Collection & Examination Compliance Update" -- can be accessed at http://www.taxtalktoday.tv/index.cfm?page=5.71. The next Webcast, "Employment Taxes: Getting Ready for Year End," will be Tuesday, Oct. 17, from 2 to 3 p.m. ET.