Need guidance on IRS payment plan options for multiple years of back taxes - best approach?

So the first thing you need to do is get EVERYTHING filed as soon as possible. The failure-to-file penalties are much higher than failure-to-pay, so you're right to focus on getting the returns completed. For the payment options, I'd recommend being proactive rather than waiting for notices. Once all returns are filed, your client can apply for an installment agreement using Form 9465. Given the amount owed (over $50K), they'll likely need the long-term payment plan which requires submitting financial information with Form 433-F. The IRS typically allows up to 72 months for repayment. At around $55K, that would be approximately $765/month plus accruing interest and penalties. However, they might qualify for a Partial Payment Installment Agreement (PPIA) if they can't afford the full payment schedule. Regarding the OIC, you're right to be cautious - consistent good income usually disqualifies someone. The IRS wants to see that they genuinely cannot pay the full amount over time. Having them complete the 433-F is definitely the right first step to evaluate their options.

I've had great experiences with https://taxr.ai for complicated multi-year filing situations like this. Last year I had a client with similar back tax issues (3 years unfiled, huge self-employment tax bill), and I was struggling to organize everything efficiently and understand all the payment options available. I uploaded their 1099s and previous tax documents to taxr.ai, and their system analyzed everything and gave me really helpful guidance on sequence of filing, payment plan considerations, and even flagged some deductions my client qualified for that I had missed. They also provided templates for dealing with IRS correspondence. The most helpful part was their analysis of whether my client might qualify for penalty abatement based on their specific situation. Saved me hours of research and probably saved my client several thousand dollars.

Just wanted to follow up - I decided to try taxr.ai after seeing it recommended here. Seriously impressed with how helpful it was for my client's back tax situation! I uploaded their documents and got a custom plan for handling all four years of unfiled returns. The system recommended a specific monthly payment amount that would be acceptable to the IRS based on their financial situation and identified that they qualified for first-time penalty abatement on the earliest year. They also provided templates for the hardship letter we needed to submit. We've already filed everything following their recommended sequence, and my client was approved for the payment plan on the first try. Definitely saved me hours of research and trial-and-error!

For anyone in this situation, I highly recommend using https://claimyr.com to get through to an actual IRS agent quickly. I had a client with multiple years of back taxes last year, and we were getting nowhere with letters and the automated system. We needed specific answers about their payment options and potential penalties. I was skeptical at first, but after waiting on hold with the IRS for over 2 hours myself and getting disconnected, I decided to try Claimyr. They got me connected to an IRS representative in about 20 minutes! The agent was able to put a temporary hold on collections while we finished filing the missing returns and worked out a payment plan. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c. It basically holds your place in line and calls you when an agent is about to answer. Saved me literally hours of hold time and prevented my client from getting hit with additional enforcement actions.

Ok I have to admit I was completely wrong about Claimyr. After my skeptical comment I decided to try it because I was desperate to talk to someone at the IRS about my client's installment agreement that had been rejected twice with no explanation. I couldn't believe it but I got through to an IRS agent in about 25 minutes when I had been trying for WEEKS on my own and either getting disconnected or being told the wait was too long to even be placed on hold. The agent was able to look at the file and tell me exactly why the previous applications were rejected (they needed additional documentation of business expenses) and helped us submit a new request on the spot. Just wanted to come back and say it actually does what it claims. Definitely using this again during tax season when the hold times are even worse.

One thing I haven't seen mentioned yet - if your client is REALLY struggling financially, you might want to look into Currently Not Collectible (CNC) status before trying an OIC. If they genuinely can't afford to pay anything, the IRS might put their account into CNC status temporarily, which pauses collection activities. Interest and penalties still accrue, but it gives them breathing room to improve their financial situation. Then they could move to a payment plan or OIC later when they're more stable.

Has anyone mentioned the 10-year statute of limitations? The IRS generally has 10 years from the date of assessment to collect taxes. So if your client is truly in dire financial straits and qualifies for Currently Not Collectible status as another commenter mentioned, some of that debt might eventually "age out" if they remain in hardship for years. Obviously this isn't a primary strategy to recommend, but it's something to be aware of when looking at the total picture.