Pay plans are typically used to satisfy obligations in which the taxpayer cannot satisfy the total obligation with one lump payment. Payments received are used to satisfy tax, penalty, and interest. Pay plans are typically negotiated between the tax authority and taxpayer. The negotiated payment amount and specific date intervals of the pay plan include such factors as total obligation amount and the taxpayer’s ability to pay. Examples in which a payment plan should be used include:
· After an audit of income, it is determined that the taxpayer incorrectly calculated their tax and owes additional tax to the tax authority. If they do not have enough money to satisfy the obligation at the time of the audit decision, they can arrange a series of payments to the tax authority to satisfy their obligation.
· Property values rose by an unexpected rate. This increased property bills and if a taxpayer could not pay the tax bill on the new assessed value of their house they could set up a pay plan to pay off the amount they owe over a six-month period.
Pay plans can cover one or more obligations linked to any account of the taxpayer. You can have multiple active pay plans for an account, but any given obligation can only be covered by a single pay plan at any point in time.
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The following topics provide background information about pay plans.
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Which Obligations Are Covered By A Pay Plan?
Navigating To The Pay Plan Maintenance Page
Recommending Scheduled Payments
Pay plans are initiated by creating a 'pay plan' type of obligation for a taxpayer. The pay plan and its obligation type maintain the details of the pay plan, such as recommendation rules, covered obligations, and scheduled payments.
Pay plans are just like other obligations in that collections activity may be used to encourage the taxpayer to pay.
Pay plans differ from other obligations in the following ways:
· Pay plans have a special role of Pay Plan.
· Pay plans have scheduled payments.
· Pay plans maintain a list of covered obligations.
· Pay plans are started and maintained on a separate transaction (refer to Pay Plan - Main for more information).
A pay plan can apply towards one or more of the taxpayer’s obligations whose obligation type is flagged as Eligible (for Pay Plan). Obligations can be added to or removed from a pay plan at any time. Additionally, an obligation can be linked to more than one pay plan as long as the pay plans to which it is linked do not have overlapping start and end dates.
A list of the obligations covered by a pay plan is maintained with the pay plan. This list is used during payment distribution to determine the priority of distribution.
Any of the following methods can be used to navigate to the Pay Plan Maintenance transaction:
· An alert in the Alert Zone highlights if a pay plan exists for the current account. You are transferred to the pay plan transaction if you drill down on the alert.
· A user can setup a favorite link associated with the pay plan transaction.
· Via any of the following menus:
· Account context menu
· Obligation context menu
· Main, Compliance menu
When creating a pay plan, you must select a recommendation rule. The recommendation rule establishes the amount to be paid and the dates on which the payments are due. In other words, the recommendation rule creates a recommended payment schedule.
The recommendation rules that you can use are specific to your implementation. The recommendation rule that you select can have default values for its parameters. If your implementation allows, you can manually override one or more of these default values. For example, you may be able to specify the period covered by the pay plan and the day of the month on which the payments are due.
If your implementation allows, you can manually modify the recommended payment schedule to suit the needs of a particular taxpayer.
Refer to Designing Recommendation Rules for more information.
Pay plans are started and maintained on a different transaction than other obligations. The topics in this section explain how to start and maintain pay plans.
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The Main page contains basic information about the pay plan. Open Compliance, Pay Plan to maintain this information.
Description of Page
Pay Plan information and Pay Plan ID are displayed on each page. These values only appear after the obligation is created. The Pay Plan ID is a system assigned random number that stays with the obligation for life. The Pay Plan information is a concatenation of important details about the obligation and its account.
The Primary Account ID is identification of the account that is financially responsible for the pay plan.
The Primary Taxpayer ID is identification of the taxpayer that is financially responsible for the pay plan.
Indicate the Division and Obligation Type. These fields control aspects of the pay plan’s behavior, such as events that occur when a pay plan is activated or stopped. These fields are gray when the status is not Pending Start.
For more information about pay plan obligation types, refer to Defining Pay Plan Options.
Recommendation Rule is used to create a recommended payment amount and payment schedule. The obligation type controls which recommendation rules are allowed for the pay plan.
If Scheduled Payment Auto Pay is Included in Auto Pay and the account is set up for automatic payment, the scheduled payments are covered by auto pay. If Excluded from Auto Pay, the scheduled payments are excluded from auto pay if it is set up for the account.
The Start Date defines when the financial relationship begins. The End Date is a display only field that indicates when the financial relationship terminates.
The Recommendation Rule Parameter Values grid specifies the parameters and their values to use for the selected recommendation rule:
· Parameter is the name of the parameter from the recommendation rule algorithm type.
· Value is the value used for the parameter. If the recommendation rule allows, you can override the default values by specifying your own.
Note. The recommendation rule’s controls the number and type of parameters. The recommendation rule controls the default values and whether they can be overridden.
The Covered Obligations grid lists the obligations that are covered by the pay plan. The list of covered obligations would depend on the business situation and the rules of the specific tax authority. Some tax authorities might allow for obligations across different tax types to be listed on the same pay plan while others may not. Rules regarding open cases (audit, bankruptcy) would also limit the eligibility of obligations. You must create the list of covered obligations before the recommendation rule can recommend a payment amount and list of scheduled payments. The grid displays the Obligation ID, Obligation Information, Account ID, Current Balance and Payoff Balance for covered obligations.
The Scheduled Payments grid displays the scheduled payments created by the recommendation rule (after you click the Recommend button). You can manually create or modify the Scheduled Date and or Scheduled Amount of any scheduled payment in the list. The Total of Scheduled Payments shows the total of all scheduled payments in the list. The Status of each scheduled payment is also displayed.
In the Action grid:
· Click Recommend to create a recommended payment schedule based on the recommendation rule.
· Click Break to manually stop the pay plan. This executes any break pay plan algorithm(s) defined for the obligation type, and changes the status of the obligation to pending stop.
· Click Cancel to cancel the pay plan. This executes any cancel algorithm(s) defined for the obligation type, and changes the status of the obligation to canceled.
The Financial History page displays the pay plan’s historical financial transactions. Open Compliance, Pay Plan and navigate to the History tab to view this information.
Description of Page
Pay Plan information and Pay Plan ID are displayed on each page. These values only appear after the pay plan is created. The Pay Plan ID is a system assigned random number that stays with the obligation for life. The Pay Plan information is a concatenation of important details about the obligation and its account.
The Account ID identifies who is financially responsible for the obligation.
The grid shows the pay plan’s financial history in reverse chronological order. The financial transactions included here are only ones that directly affect the balance of the pay plan obligation, such as fees. The following fields are displayed:
· The Effective Date is used to compute how many days old the debt is.
· Financial Transaction Type displays the type of financial transaction except for adjustments. For adjustments, the adjustment type’s description is shown.
· Current Amount is the effect of the financial transaction on the obligation’s current balance.
· Current Balance is the amount owed by the taxpayer at the time of the transaction.
The characteristics page contains information that describes miscellaneous information about the pay plan obligation. Use Compliance, Pay Plan, Characteristics to open this page.
Description of Page
Note. You can only choose characteristic types defined as permissible on the obligation record. Refer to Setting Up Characteristic Types & Their Values for more information.
The following fields display:
Effective Date Indicate the date on which the characteristic value becomes effective. Note, the effective date defaults to the pay plan start date.
Characteristic Type Indicate the type of characteristic.
Characteristic Value Indicate the value of the characteristic.
The topics in this section describe how to perform common pay plan functions.
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How To Set Up Automatic Payment For A Pay Plan
To set up a new pay plan:
· Navigate to the Pay Plan maintenance page.
· If the account is not already specified, select the Account for which you want to create a pay plan
· Define the Division and Obligation Type to use for the pay plan.
· If necessary, change the Start Date (the current date is defaulted).
· Select the Recommendation Rule to use and modify any of the default parameters to meet the needs of the taxpayer.
· Verify the list of Covered Obligations.
· Click Recommend.
· On the pop-up dialog, specify the Schedule Start Date and click Recommend.
· Make any necessary changes to the scheduled payments grid and click Save.
The pay plan is created in a pending start status. In order for the pay plan to become effective, it must be activated. Some tax agency’s will require an approval or review before a pay plan can be activated. There are a couple of ways a pay plan can be activated:
· From the Pay Plan maintenance page:
· If the account with the pay plan you want to activate is not specified, select the Account of the pay plan
· If the account has more than one pay plan, select the pay plan you want to activate.
· From the pay plan context menu, navigate to the Obligation page.
· Click Activate.
· From the Obligation maintenance page:
· If the pay plan you want to activate is not specified, select the pay plan using the obligation search.
· Click Activate.
An active pay plan may need to be stopped due to the taxpayer breaking the terms of the agreement. To stop a pay plan:
· Navigate to the Pay Plan maintenance page.
· If the account with the pay plan you want to stop is not specified, select the Account of the pay plan
· If the account has more than one pay plan, select the pay plan you want to stop.
· Click Break.
A pay plan may need to be cancelled for various reasons: the pay plan was created in error or the taxpayer has indicated additional hardship and a new pay plan needs to be negotiated. A pending start, active, or pending stop pay plans may be cancelled. To cancel a pay plan:
· Navigate to the Pay Plan maintenance page.
· If the account with the pay plan you want to stop is not specified, select the Account of the pay plan
· If the account has more than one pay plan, select the pay plan you want to cancel.
· Click Cancel.
If a taxpayer wants to pay their pay plan scheduled payments automatically:
· Set up the account for automatic payment (as described under How To Set Up A Taxpayer To Pay Automatically).
· Navigate to the Pay Plan Maintenance page and select the pay plan for the account.
· Set the Scheduled Payment Auto Pay field to indicate that the scheduled payments are Included in Auto Pay.