CP2000 and Installment Agreement

[zeros]

Client had a balance due on 2011 return and chose to get an installment agreement. There still is a balance due. She also got this week a CP2000 stating that she forgot to report some income which is correct. Can the new balance as a result of the under-reporting be added to the installment agreement? Anybody ever done that?

[JohnH]

Yes. She will probably have to pay an addtional fee to get it reset. Provided the total is under $25K, the requested payment will satisfy the debt in 5 years or less, and there aren't multiple years involved, approval is usually automatic.

[ChEAr$]

Yes. She will probably have to pay an addtional fee to get it reset. Provided the total is under $25K, the requested payment will satisfy the debt in 5 years or less, and there aren't multiple years involved, approval is usually automatic.

My take is different that my esteemed colleague in North CArolina.

the installment agreement (IA) is already in place and IRS won't reset it or even bother taxpayer about the tax increase.
The payments being made will just take longer to clear the debt.

But to the OP, let us know if different.

[Roberts]

Yes. She will probably have to pay an addtional fee to get it reset. Provided the total is under $25K, the requested payment will satisfy the debt in 5 years or less, and there aren't multiple years involved, approval is usually automatic.

I'd avoid resubmitting a new installment agreement and just call the IRS and ask them to adjust the current agreement. If the client is accepting their adjustment, they'll probably make an adjustment to the current installment agreement to get them caught up.

Is the state an issue also?

[JohnH]

Zeros: I like the answers from Harlan and Roberts much better than mine. If I had this situation to come up, I think I'd try their approaches first. Will be cheaper for the client if it works out as they suggest.

[smithtax]

Yes. She will probably have to pay an addtional fee to get it reset. Provided the total is under $25K, the requested payment will satisfy the debt in 5 years or less, and there aren't multiple years involved, approval is usually automatic.

The Fresh Start Program lengthened the repayment period to 72 months and the threshold to $50K for a Streamlined Installment Agreement, with no CIS (Collection Information Statement) needed; however, if amount is more than $25K, a direct debit plan is required.

[taxea]

If TP is within the requirements for an IA, it has been my experience that a phone call to the IRS will result in the additional liability being added to the existing IA.....often with no increase in the monthly payment.