Installment Agreement Default

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    Sandi Leyva

    Clients currently have an installment agreement. They will have a balance due on their 2018 return and will not be able to pay by April 15, 2019. We will file an extension. If the return is filed by October 15 and the balance due plus penalties and interest is paid in full, will the IRS consider the installment agreement in default because they did not pay in full by April 15.



    We have clients who get an installment agreement every year because they don’t make estimated payments (despite our advice they do so). They usually file in October and do not have the balance paid in full by April. It’s been my experience that the IRS does not reject the subsequent year request for an installment agreement. But other tax preparers could have had different experiences.


    Eric Green

    Bob, technically the taxpayer has defaulted by incurring a new penalty. However, my experience with this is that I have the client slightly overpay so that they end up with a small refund. I find that the IRS will not default the agreement. I am unsure if this is just pragmatism on the part of the IRS or a glitch in their system, and I do not want to bring it to their attention (and have them fix the glitch).

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