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Hi. I'm helping out my sister,who is self-employed and made (and spent) way more money than usual last year. As a result, she and her DH owe about $12K to the IRS. They don't have it.

I've been looking into the installment agreements, and it appears their procrastination in filing their 2006 returns may come back to bite them now. They did pay the full amount expected for 2006, but have not gotten around to finishing the returns. Yes, way past the extension deadline.

So anyway, what is their best course of action now? They are not ready to file their returns, and were planning to submit a 4868, but they can't include the check. Should they send it without any money? They don't expect to be able to pay this in the next few months, so what now?

Is the IRS likely to reject an installment plan based on their failure to file 2006 in a timely fashion?

Should they send in the extension, and quickly finish both years while waiting for the bill from the IRS?

Please advise. I have no experience with this.


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