Installment agreement with 1040

[Catherine]

Have a client who wants an installment agreement to pay their (much higher than expected) 2010 taxes.

1. Can we do this WITH an e-filed return?

2. Does the return instead need to be paper-filed?

3. Do we submit a 9465, a 433-D, or both? Or neither?

Am I _so_ tired tonight I would cry but I don't have the energy. So I'm printing completed returns instead. But this client called after I left a message this afternoon.

TIA,

Catherine

[JohnH]

I think it's better to file with a partial payment, let IRS send an assessment, and then file the 9465 when the assessment arrives. If he owes less than $25k, and is otherwise in compliance, IRS will automatically approve any payment plan that pays off the balance in 5 years or less. No 433-D needed in that case.

The minimum payment can be approximated by dividing the balance due by 50 ( using this divisor will get you a result that will pay off in 60 months after taking interest and FTP penalty into account). Setting up the plan for the minimum payment means less chance of a default, and does not prohibit the client from paying more each month or making larger payments sporadically if they have the funds from time to time, thus lowering the net borrowing cost. Right now I think the total cost of interest plus FTP penalty equates to an effective interest rateof about 10% APR.

An even less stressful approaches to just have the client call IRS when the assessment arrives and set up the payment plan over the phone. Or else do a conference call with the client on the line. That's much simpler than fussing around with POA's.

[Kea]

I've had clients pay what they can and then set up installment with IRS later. Other clients have provided info for installment plan at time of preparation & I have included in e-file. They have not been rejected. I assume installment plans go through as planned - clients haven't told me otherwise the following year.

I just leave it to the client to decide how they want to proceed.

[Lion EA]

I have e-filed with an installment plan included.

[Catherine]

Thank you, everyone!!

[Edward]

Note that on "Payment and Refund Options (1040 E-File Info) the fourth box down. By clicking on this, you can efile the 9465 with the return.

[Catherine]

Note that on "Payment and Refund Options (1040 E-File Info) the fourth box down. By clicking on this, you can efile the 9465 with the return.

Yes, I see that option -- however, this taxpayer wants to send about 20% of what is owed and get an agreement for the rest -- so it looks like we'll have to send a check and then follow up with a paper request.

Thanks, though!