People First Initiative FAQs: Installment Agreements/Payment Plans

This FAQ is not included in the Internal Revenue Bulletin, and therefore may not be relied upon as legal authority. This means that the information cannot be used to support a legal argument in a court case.

For taxpayers under an existing Installment Agreement/Payment Plan, payments due between April 1 and July 15, 2020 are suspended. Taxpayers who are currently unable to comply with the terms of an Installment Payment Agreement, including a Direct Debit Installment Agreement, may suspend payments during this period if they prefer. Furthermore, the IRS will not default any Installment Agreements/Payment Plans during this period. By law, interest will continue to accrue on any unpaid balances.

Q. Will this help people in existing Installment Agreements/Payment Plans?

A. Yes. Taxpayers who are currently unable to comply with the terms of an Installment Payment Agreement, including a Direct Debit Installment Agreement, may suspend payments during this period, if they prefer.

Q. Will the IRS continue to deduct direct debit payments from my bank for Direct Debit Installment Agreements (DDIAs) during the suspension period?

A. Yes. IRS will continue to debit payments from the bank for Direct Debit Installment Agreements (DDIAs) during the suspension period. However, taxpayers who are unable to comply with terms of their Installment Agreement/Payment Plan may suspend payments during this period. Installment agreements will not default due to missing payments during the suspension period through July 15, 2020.

Q. How do taxpayers stop their Direct Debit Installment Agreements (DDIAs)?

A. The IRS is unable to halt debit payments from banks for DDIAs during the suspension period. Taxpayers with a DDIA who want to suspend their payments during this time should contact their bank directly to stop these payments.

Banks are required to comply with customer requests to stop recurring payments within a specified timeframe. The suspension period expires July 15, 2020. In order to avoid possible defaults taxpayers must inform their bank at least two weeks before their next payment is due to allow the debits to resume.

The following resources provide guidance on how to work with the bank to stop payments:

Q. Will current Installment Agreements/Payment Plans be automatically suspended?

A. No. However, taxpayers unable to comply with the terms of their existing agreement, may suspend payments due between April 1 and July 15, 2020. The IRS will not default any Installment Agreements/Payment Plans during this period. As required by law, interest will continue to accrue on any unpaid balances.

Q. Will taxpayers get monthly payment vouchers during this time? 

A. The IRS is not mailing monthly reminder payment vouchers due to IRS office closures caused by COVID-19. Taxpayers able to pay should continue to do so, and taxpayers currently unable to comply with the terms of an Installment Payment Agreement may suspend payments during this period. The IRS will resume mailing reminder notices as IRS offices re-open.

Q. Is the IRS suspending new Installment Agreements/Payment Plans?

A. No.In fact, the IRS reminds people unable to fully pay their federal taxes that they can resolve outstanding liabilities by entering into a monthly payment agreement. Visit IRS.gov/payments for more information about IRS payment options. Most taxpayers will qualify to apply for a payment plan or Installment Agreement online without needing to call or write to the IRS.

Q. I set up short-term payment plan to pay my balance within 120 days prior to the relief period. Is my short-term payment plan payment also suspended?

A. No, taxpayers can only suspend long-term Installment Agreement payments. If a taxpayer is unable to pay the lump sum full payment by the agreed upon date, they may be able to revise their short-term payment plan to a long term installment agreement using the Online Payment Agreement application. Note: Contact with an IRS representative may difficult due to COVID-19. The IRS is working to reopen its offices and restore mail service. Please check the IRS Operations updates regularly.

Q. How will the suspension period affect my balance due amount and the length of my Installment Agreement/Payment Plan?

A. Although agreements will not default due to missing payments during the suspension period, penalties and interest will continue to accrue. There will be no adjustment of the balance owed. As a result, most Installment Agreements/Payment Plans will take longer to complete to cover the amounts not received during the suspension period, as well as any additional accruals.

Q. What happens to my Installment Agreement/Payment Plan after the suspension period ends?

A. Taxpayers should resume making their normal monthly payments due after July 15, 2020. For taxpayers who stopped direct debit payments with their bank, they must inform their bank to allow the debits to resume at least two weeks before their next payment is due.

Q. How can I modify my existing Installment Agreement/Payment Plan?

A. Taxpayers can modify most existing installment agreements using the Online Payment Agreement application. At this time, taxpayers cannot make changes to existing direct debit installment agreements online. Note: Contact with an IRS representative may difficult due to COVID-19. The IRS is working to reopen its offices and restore mail service. Please check the IRS Operations updates regularly.

 

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