I had a consult today with someone who had a current I/A but due to prioritizing other items over his estimates he is looking at a balance due for his 2019 taxes (around $26k Fed total, not sure about what estimates he made but probably not anywhere near close enough).
In looking at his current financial situation, his income less allowable expenses actually comes in around or a bit higher than his current I/A.
Question 1: if he filed his return on April 15th and owes a large tax liability (and I assume this will default the agreement) will the IRS require that he provide new information or can he just call and get the new balance added? I assume no but curious.
Question 2: if there is a chance he can get loans, etc to make full payment by October 15th, is there any reason not to extend the return and see if he can’t make it work?
Jim, I would extend to October and hope he can raise the funds. Technically he will default due to the penalty, however if he can pay slightly more than the tax interest and penalty so he is in a refund position, albeit small, then I fins the IRS often does not default the existing agreements. technically this is not the way it works, but mechanically I find the “refund” status avoids the default. Same for Offer candidates within the first 5 years after their Offer is accepted. Give it a try – there is nothing to lose.