Installment agreement wrong - how to fix?

[BulldogTom]

I picked up a client about 4 years ago.  Had an installment agreement in place that was being paid on regularly.  GM% was clearly indicated on the prior returns and I asked about it when I got the client.  They said it was correct.  Fast forward to this year.  Note holder paid off the loan in full early and the taxes are coming due.  TP is adamant that the amount of gain is too high.  I explained that we have been keeping the same GP% since the beginning.  After digging around in their files from 2000, it appears that the GP% is in fact too high and the the TP is correct.  All prior years, the amount was so small that it did not make much of a difference because the interest was the biggest part of the calculation.  They have collected about 1/3 of the total principal in the last 14 years.

 

How do you correct an installment agreement that was started in 2000?

 

Any advice appreciated.

 

Tom

Newark, CA

[Abby Normal]

Just use the correct % for the final year and tell the client you can amend the past 3 years if they wish, and tell them their inattention to detail has cost the money over the years.

[kcjenkins]

I'm with JM on this one.  This is not a change in method, just correcting a math error.  Keep good notes and don't worry about it.

Just don't forget to add a bit to your bill to cover the likelihood of a CP2000.