Tax Law (Questions About Taxes)/sending payments

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QUESTION: Just filed taxes on turbo for my sister and she owes money.  I selected that she will send in a check.  We have the voucher for her to send in with payment, but she cannot pay in full.  If she sends in partial payments along with her voucher each month, will they accept it and apply it toward her balance, or is she required to submit an installment plan application first?

ANSWER: Jim,

Two scenarios here.  First, if she can pay the balance off within 120 days of the due date, she can call the IRS and make arrangements.  If not, she must apply for an installment agreement using Form 9465. There is a fee involved in addition to interest on the balance due.

Hope this helps.

John Stancil, CPA

---------- FOLLOW-UP ----------

QUESTION: Well, she did neither.  They couldn't be reached by phone, and when she tried to apply online for a payment arrangement, it didn't recognize her in the system.  Thus, she did not set up any payment arrangements, nor send in any applications.  She's simply paying online using the IRS approved payment processors with her debit card.  She showed me the confirmation emails and it does show her name and ssn and amount paid.  Do you think this will be ok, and that the payments will be applied correctly to her balance?  There is a chance it will be paid off within the 120 days, however it may take a little longer.

Answer
Jim,

There is no doubt it will be properly applied.

At this point, there is no telling what the IRS will do. If I were guessing, I would say that if she pays it off in 120 days, it will be done by the time they catch it.  They will likely bill her for penalties and interest when they take notice of it.

Worst case scenario, they will send her a deficiency letter, which she can respond to and make payments.

John Stancil, CPA

Tax Law (Questions About Taxes)

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John Stancil, CPA

Expertise

I can answer questions on personal income taxes, partnerships, and some corporate income taxes. I can deal with some state tax questions. Limited gift and estate tax questions. I am also familiar with ministerial and church tax reporting issues. I am Professor Emeritus at Florida Southern College. Sales taxes and property taxes are state and local issues so I am not likely be be able to give you an in depth answer on those types of taxes. I have maintained a CPA practice, specializing in tax, for over 35 years. I am a member of the National Association of Tax Professionals, The Florida Insititute of CPA's, The NCPE Fellowship. In addition I am a Certified Mentor for SCORE. Visit my website at www.mybaldcpa.com. I also offer seminars and consultations to churches and clergy on their tax issues at www.churchtaxsolutions.com Also visit my blog, www.thetaxdocspot.com. I am listed on Tax Connections at https://www.taxconnections.com/profile/John-Stancil/12258973 Prepare and file your own taxes at www.1040stancilcpa.com

Experience

I hold a doctorate in Accounting, and am a CPA. My certifications of CIA, CFM, and CMA are inactive. I passed all certification examinations on the first attempt, and received honorable mention for my scores on the CIA exam. I have operated a CPA firm for over 37 years and have taught accounting and tax at the college level for over 35 years.

Organizations
FICPA, NATP, NCPE Fellowship, Lakeland Business Leaders

Publications
The CPA Journal, Florida CPA Today, Green Consumer, Green Business, Global Sustainability as a Business Imperative, Palmetto Review, NATP TaxPro Quarterly, Mustang Journal of Finance and Accounting.

Education/Credentials
DBA University of Memphis MBA University of Georgia BS in Accounting Mars Hill University

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