A friend of mine has filed his/her taxes using a paper return with money due. The IRS has yet to process the return. Can my friend setup a payment plan with the IRS now? Should my friend wait for the IRS to process the return before setting up the payment plan?
Your friend can file the application, however it may take the IRS some time to process it if the return hasn't yet been processed. See the instructions for form 9465:
We will usually let you know within 30 days after we receive your request whether it is approved or denied. However, if this request is for tax due on a return you filed after March 31, it may take us longer than 30 days to reply. If we approve your request, we will send you a notice detailing the terms of your agreement and requesting a user fee.