installment agreements and irs letters

[emcwillard]

hello,

i have a few clients that have called and said that they received a letter from the irs saying they need to pay their tax bill by the end of the month. when we filled their taxes i applied for an installment agreement and they paid a partial amount while was debited. Now they are receiving this letter. when i log into proseries it says that they are now due a refund because of the laws that changes. 

so my questions are, should they resubmit the installment agreement? should they pay the tax bill? or should they not pay and wait for their refund?

[Just-Lisa-Now-]

I've got a few of these sent to me from clients this past week as a well.   The returns are stuck in processing due to that UI exclusion that IRS is supposed to fix automatically, but the computers are still spitting out bills based on the due date.

I think my approach will be to respond with a generic type letter stating that the pending correction for UI exclusion negates this balance due and were waiting for IRS to adjust accordingly.

[Accountant-Man]

Having nothing to do with Covid or 2020, the IRS has always sent monthly letters asking for full payment on installment agreements; that's just the way their system works. IE., total tax due is $5,000, and you pay $500 a month:

1) Filing pay $500

2) next month pay $500

3) Get a letter says you owe $4,000 (plus interest).

This doesn't mean you must pay all $4,000 now. You must continue to pay $500 a month.