Initiating taxpayer IRS payment plans

[AZ-Tax]

I was considering suggesting the TP mail in what ever amt then can afford to the IRS and attach a note asking the IRS to setup them (the TP) up on a payment plan for the balance. Is that usually the normal way?

[JohnH]

If it's an original return, they don't even need to send in a note, because it will just be ignored. IRS will credit the amount paid against the balance due, adjust for P&I, and send them a bill in about 30 days or so. Then they can call & set up the payment plan on the phone or else mail in a 9465. I like the phone method better because it's easy & quick - most of the time the collections people are very friendly. They don't generally even ask how the taxpayer got into the situation, although they will ask if withholding has been adjusted so that the taxpayer doesn't wind up in the hole next year. (Of course, the answer to THAT question is always "yes")

It's also OK to enclose a 9465 with the return, although sometimes it just gets lost in the shuffle because separate departments are handling the return and the payment arrangement. Too easy for something to get confused and they wind up not sure of where they stand, or else with two installment agreements in the system. I think it's better to keep the filing of the return and the setting up of the installment agreement two separate transactions.

If they owe under $25K, I'd suggest that they divide the balance by 50 and ask for that amount as the monthly payment. This will meet the guideline of paying it off in 60 months (with interest), and will give them the lowest monthly obligation that they must meet without defaulting. If they think they can send more, they're free to pay any amount they wish each month over & above the agreed-upon payment in order to retire it before 60 months & save some P&I.

[Lion]

Set-up Fee

And, the set-up fee is higher for a paper installment agreement. I like to set them up with my client on line.