Estimated payments earmarked for current year but owe for back years.

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  • #13768
    Christopher Carmona
    Participant

    Just wanted to confirm that if the client sets up quarterly estimated payments those funds get applied to the year referenced on the voucher.
    They are going to enter an installment plan or OIC for the back years but want to be current going forward.

    Thank you,
    Christopher Carmona

    #13921
    Eric Green
    Keymaster

    Chris, absolutely. Check out Revenue Procedure 2002-26. If you send in a voluntary payment that you specify how it should be applied (like a 1040-ES payment, that has in the memo its a 1040-ES payment for 2019 and has the voucher with it) then the IRS is obligated to apply it that way. They wills crew this up every now and then but I have not has an issue getting it fixed, SO LONG AS the client actually marked it for the quarterly. You can also do this through the online portal and select to have it applied to the current quarter, I believe.

    #14004
    Charles Zagara
    Participant

    This is essential if you are going to have the client in current compliance so that you can set up an installment agreement or OIC for past years. If the IRS kept taking estimated payments and applied them to past due taxes the taxpayer could never get into current compliance.

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