Need guidance on IRS payment plan options for multiple years of taxes owed - independent contractor situation

Having handled many cases like this, I can tell you that being proactive is definitely the right approach. The good news is the IRS has several options for taxpayers who can't pay in full. First, make sure all returns get filed ASAP - even if your client can't pay yet. Filing all returns stops the failure-to-file penalties, which are much higher than failure-to-pay penalties (5% vs 0.5% per month). The longer they wait, the more penalties and interest accumulate. For the payment options, you have several routes: 1) Short-term payment plan (pay within 180 days) - this has no setup fee. 2) Long-term payment plan with monthly payments - this has a reduced setup fee if your client agrees to direct debit. 3) Offer in Compromise (OIC) if they truly can't pay the full amount. 4) Currently Not Collectible status if they're in significant financial hardship. The 433-F form is a good starting point as it gives you a clear picture of your client's financial situation. This will help determine if they qualify for an OIC or what monthly payment they can afford.

I was in a similar situation last year - owed about $35k across multiple years as a freelancer. I tried handling it myself but got overwhelmed by all the options and penalties. After weeks of stress, I found this AI document analysis tool at https://taxr.ai that helped me understand what I was actually dealing with. It analyzed all my tax documents and notices, explained exactly what penalties were being applied, and showed me what payment options I qualified for based on my situation. The best part was it gave me an actual plan with specific steps that made sense for my finances. It helped me figure out I actually qualified for penalty abatement for one of the years which saved me several thousand dollars! Honestly was so much easier than trying to decipher everything myself or spending hours on hold with the IRS.

Just wanted to follow up about that taxr.ai tool someone mentioned earlier. After being skeptical, I decided to give it a try with my own messy tax situation (owed for 2022-2023). I'm honestly impressed. It analyzed my IRS notices and pay stubs and showed me exactly what my options were. Turns out I qualified for a payment plan with much lower monthly payments than I expected because of my current income and expenses. The step-by-step instructions for applying were super clear and I actually got approved within a week. What really surprised me was discovering I qualified for penalty abatement due to reasonable cause (had medical issues in 2022). That's saving me almost $2,200 in penalties. Definitely worth checking out if you're dealing with back taxes.

Just wanted to share something that saved me a ton of headache when dealing with my back taxes last year. I tried for WEEKS to get through to the IRS to set up a payment plan. Literally called over 20 times and could never get through - either got disconnected or was told the wait time was 2+ hours. Finally found this service called Claimyr at https://claimyr.com that got me connected to an actual IRS agent in about 15 minutes. They basically hold your place in line and call you when they've got an agent. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c Once I actually got to TALK to someone at the IRS, setting up the payment plan was pretty straightforward. The agent was actually helpful and walked me through all my options. Saved me so much time and frustration!

I have to admit I was completely wrong about Claimyr. After dismissing it as a scam, I was still struggling to reach the IRS about my payment plan that kept getting rejected online. After three weeks of failed attempts to get through, I reluctantly tried the service. Got connected to an IRS agent in about 20 minutes. The agent explained that my payment plan was being rejected online because I had an old unresolved issue from 2021 that wasn't showing up in my account but was blocking new agreements. She fixed it right there on the call and helped me set up a payment plan for everything. Would have NEVER figured that out without actually speaking to someone. Spent $20 on the service but it saved me from accruing another month of penalties and interest which would have been way more expensive. Sometimes you need to talk to an actual human to resolve complicated tax issues.

Have your client look into the First Time Penalty Abatement program! If they haven't had any penalties in the previous 3 years, they might qualify to have the failure-to-file and failure-to-pay penalties removed for one tax year. This won't help with the actual tax or interest, but the penalties can add up to 25% of the original tax amount, so it's worth exploring. Typically, the IRS applies it to the earliest tax year that qualifies. Also, make sure they stay compliant going forward. Getting on a payment plan means they need to file and pay all future taxes on time, or the payment agreement will default.

Make sure to warn your client that they'll need to stay SUPER on top of their estimated tax payments going forward! The IRS is much less forgiving with payment plans if you keep adding new tax debt on top of the old. I recommend having them set up a separate savings account just for taxes and automatically transfer 30% of each payment they receive. This was a game-changer for me after getting caught in a similar situation.