Taxpayers owe back taxes that are more than $10,000 and less than $50,000. They have the financial means to pay for the amount that they owe, but they insist on having an installment agreement instead of paying the amount due all at once. Am I supposed to help them set up an installment agreement if I know they can actually pay the amount due all at once?
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You're not required to do anything, including making value judgements about their ability to pay or right to obtain an I/A. If the taxpayer meets the requirements for an I/A, they're entitled to request one. It's that simple.
If you don't want to get involved, just tell them to call the phone number on their notice. They can get it set up in about 10 minutes by simply speaking to someone at IRS. Or you can give them form 9465 and let them fill it out themselves. It only contains about 5 or 6 entries.
Some clients would greatly appreciate help in setting up their I/A as a favor, while others might consider that help of this type is a minimum requirement for continuing their business relationship with their preparer. Guess you have to decide where they fall in that spectrum and how important it is to retain their business in the future. For me personally, I'd fall in the second category if I were a client."The only function of economic forecasting is to make astrology look respectful" - John Kenneth Galbraith -
Decision to file installment payment agreement Form 9465
As noted by JohnH, it's not your decision to make.
If neither you nor the client wishes to proceed using your help, let them look around https://www.irs.gov/individuals/paym...ent-agreements instead.
It should be noted there are IRS application fees involved, with rates varying related to how the application is made (internet / phone / paper) and how the monthly payments will be made.
And aside from the Form 9465, the related and required Form 433-F can sometimes be daunting.
FEComment
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Good catch. I forgot about the online payment agreement. If the amount owed is small enough to avoid the 433-F, then the process is fairly simple, whether by phone call, OPA, or paper request.
Insofar as their decision is concerned, the effective interest rate (statutory interest plus FTP penalty), is considerably less than they would pay on an unsecured loan from most commercial lenders. It doesn't affect their credit utilization, thus no adverse effects on their credit score. In many cases it's a smart move to set up a payment agreement, provided they don't keep going back to the well."The only function of economic forecasting is to make astrology look respectful" - John Kenneth GalbraithComment
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