Answer:The three-month rule you are referring to applies to delinquent federal debt, and specifically refers to tax liens according to USDA. In your case there is no tax lien because the customer has set up a payment plan with the IRS, so the three-month rule technically would not apply.  I have seen underwriters in the past, however, interpret the regulation to mean that any federal income taxes owed are delinquent, but that is not the intent of the regulations.Reference:HB-1-3555 Attachment 10-B: Delinquent Federal Tax DebtApplicants with delinquent Federal tax debt are ineligible.Tax liens may remain unpaid if the applicant has entered into a valid repayment agreement with the federal agency owed to make regular payments on the debt and the applicant has made timely payments for at least three months of scheduled payments.  The applicant cannot prepay scheduled payments in order to meet the required minimum of three months of payments.Payments will be included in the DTI ratio.Documentation will include IRS evidence of the repayment agreement and verification of payments made.Social Media Post:USDA will allow a borrower with a tax lien provided the borrower has entered into a valid repayment agreement and has made payments for at least 3 months.Supporting Resource:Federal Tax Lien Requirements – All Agencies – Chart[Article Published in Question & Answer Issue – March 25, 2019]Copyright © 2019 – Mortgage Currentcy – All Rights Reserved

Related Article Title: USDA – IRS Payment Plans:  If a client has an IRS payment plan for the previous year and they will likely need one for the most recent year, how do we demonstrate that 3 payments were made?  [Federal Tax Lien Requirements – All Agencies – Chart] Answer: The three-month rule you are […]

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