Presumably this is a partial payment installment agreement (PPIA) that will not full pay the total due by the collection statute expiration date (CSED).
The internal revenue manual for this is at http://www.irs.gov/irm/part5/irm_05-014-002.html
"The Internal Revenue Service limits the length of installment agreements to the 10-year statutory collection period except in connection with PPIAs.
IRC 6502(a)(2)(A) provides that statutory periods for collection may be extended in connection with the granting of an installment agreement. It is the policy of the Internal Revenue Service that CSED extensions are permitted only in conjunction with Partial Payment Installment Agreements in certain situations (See IRM 220.127.116.11.3).
On March 9, 2002, the Job Creation and Worker Assistance Act amended Internal Revenue Code (IRC) 6331(k)(3) by referencing IRC 6331 (i)(5) to state the statue of limitations for collection (CSED) is suspended for an installment agreement during these timeframes: (a) proposed installment agreement is pending; (b) thirty days following the rejection of an installment agreement; (c) thirty days following termination of an installment agreement; and (d) during any appeal of the termination or rejection of the installment agreement.
The systemic suspension of the CSED during the time a proposed IA is pending is built into Masterfile (MF) processing and is triggered by the TC971 AC043, TC972 AC043 or TC971 AC063 dates. No TC550 posts to Masterfile. The suspension systemically updates the CSED field on IDRS. "
In plainer language:
There are parts of the tax law that extend the time limitation for:
(a) when proposed installment agreement is pending;
(b) thirty days following the rejection of an installment agreement;
(c) thirty days following termination of an installment agreement; and
(d) during any appeal of the termination or rejection of the installment agreement.
Extensions of the statutory period for collection are limited to no more than five years (plus up to one year to account for changes in the agreement )
IRS policy is generally not to extend the CSED for PPIA; but not every case if handled the same.
IRM 18.104.22.168.3 says basically that an extension is only used when there is some evidence that future income will be more than what the taxpayer currently has.
There are examples of the IRS not extending the statute:
The individual taxpayer cannot pay the liability within the CSED but can make monthly payments. The statute will expire in three years. The taxpayer owns real property with minimal equity and they cannot borrow against the equity. The taxpayer owes $10,000 and can pay $200 per month. Secure a PPIA for three years and no waiver is required. There will be a two year financial review conducted. If there is no significant change in ability to pay, the payment amount will remain unchanged until the statute expires. A waiver could not be secured during the two year financial review process unless the taxpayer's financial condition has improved, the agreement is terminated, and a new one is granted."
In summary there is some extension, by law, for the items listed but there is not an extension (except in a few cases) for a partial payment installment agreement.
Just want to be clear that it is the agreement you have that will rule and not necessarily the general case where the only extensions are those time periods in the law.
Please ask if you need clarification.