Best way to change an existing payment plan? – On-line for this case?

[Brian Barto]

Taxpayer only owes $4223 for 2017-2019. He HAD an installment agreement in place – paying $250/month. He logs into IRS.gov once a month and makes the payment. He has made all payments to date. According to his transcript, the Installment Agreement was terminated on 3/2/2020. Not sure why? He is in fact, out of compliance. I imagine this is the reason. He owed tax on his 2019 return, but that was not filed/accepted until 3/6/2020.
He would like to re-instate, or re-structure the payments and increase to $350 or $400/mo.
I imagine, the IRS COULD demand financials since he defaulted on prior, but doubt they are concerned about such a small debt. He is ready to do automatic debit. Can I do this on-line to save him some on the application fees? Or, better to do on the phone?

Side note: On THS, it shows under-reported income by $164,000 on 2019. Did not report the 1099-S. He sold a personal residence – which will be exempt from any capital gain. A simple 1040X will fix it. Is IRS likely notice this and perhaps deny the installment agreement? (I was thinking to prepare the 1040x, call IRS, fax it to them while on phone if they ask).

[RUQAYYAH SHABAZZ]

Hi Brian,

I would definitely prepare and file the 1040X to report the AUR income. ACS generally doesn’t accept the 1040X over the phone but you may be able to e-file the 1040-X in a few weeks instead of having to mail it in for processing.

In the meantime, I recommend using OPA (the online service) to try setting up the installment agreement because the set up fee is usually lower. However, if your client is not in compliance then it may not work and then you’ll have to call in to figure out what’s needed.

[Author]

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