Payment Plan

[Mike Mac]

Last week I had a client owe a sizable amount of taxes and wanted to set up a payment plan with the IRS. I explained the costs associated with this but she chose to fill out the form to request a payment plan & sent it in. Today she called and said her dad is loaning her the cash to pay.

Do I have to send anything to IRS to cancel the payment plan request so my client is not charged any fees related to setting it up or will the IRS just disregard the request when they see that the taxes due were paid in full by Apr 15th.

Thanks,

Mik

[Koss]

Cancelled Installment Agreement

This may be the only scenario I have ever run into where I would strongly recommend making the payment early, indeed making it immediately.

At least in theory, if the original return was filed electronically, your client may have a PIN that would allow her to make the payment by ACH debit through EFTPS or something.

If the IRS processes the Installment Agreement Request before they process the payment, they're going to charge her the set up fee, and they're probably not going to refund it or credit it either.

But if she can get the payment credited to her account before the agreement is processed, then, yes, I suppose they would disregard it if there is no balance due... if they use common sense... or if their software was built with an algorithm that includes common sense. You cannot assume either one of those to be the case.

Good luck trying to communicate with the IRS in advance about cancelling the processing of a form that hasn't been processed yet. In order to cancel it, they would have to process it, so that their system could see that it exists. And once it's processed, she'll owe the set up fee.

Kinda like the AMT form... you have to fill out the form and file it in order to show that the form does not have to be filed.

Burton

_____________________________________
The map is not the territory...
and the instruction book is not the process.

[thomtax]

I had the same situation a couple of years ago. Within a few days of e filing, I wrote a letter to the IRS telling them the situation and that the amount would be paid in full by the due date. Nothing further was ever heard about the payment plan. My only thoughts were that when the payment was received on time, it may have automatically killed the payment request.

I won't say that this will work now, with the hungrier IRS, just relaying the experience.

LT

[Mike Mac]

I'll write a letter for her

Thanks for sharing your experiences. I think I'll write a short note for her to sign and send in to show she changed her mind and made an effort to cancel the request for payments.

Mike