These FAQs are 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? (updated July 9, 2020) A. Yes. Taxpayers who were unable to comply with the terms of an Installment Payment Agreement, including a Direct Debit Installment Agreement, were able to suspend payments until July 15, 2020. All payments should resume with the first payment due on or after July 16, 2020 to avoid potential default of the agreement. Q. What options are available to taxpayers who owe taxes but can’t pay in full? (added July 9, 2020) A. The IRS recommends that taxpayers who are unable to pay their taxes in full should act as quickly as possible. Tax bills can quickly accumulate more interest and penalties the longer they sit. The IRS is still processing requests and installment agreements. Individuals who owe $50,000 or less in combined income tax, penalties and interest and businesses that owe $25,000 or less in payroll tax and have filed all tax returns may qualify for an Online Payment Agreement. Most taxpayers qualify for this option, and an agreement can usually be set up in a matter of minutes on IRS.gov/payments. Though interest and late-payment penalties continue to accrue on any unpaid taxes, the failure to pay tax penalty rate is cut in half while an installment agreement is in effect. The usual penalty rate of 0.5 percent per month is reduced to 0.25 percent. For the calendar quarter beginning July 1, 2020, the interest rate for underpayment is 3 percent. Q. Will the IRS continue to deduct direct debit payments from my bank for Direct Debit Installment Agreements (DDIAs)? (updated July 9, 2020) A. Yes. The IRS continued to debit payments from the bank for DDIAs during the suspension period if the taxpayer didn’t act Installment agreements will not default due to missing payments during the suspension period through July 15, 2020. Taxpayers who had their bank suspend DDIA payments, should contact the bank immediately to ensure their first monthly payment due date occurring on or after July 15, 2020 is sent to avoid penalties. If a taxpayer can’t meet their current installment agreement terms due to a COVID related hardship, they can revise the agreement on IRS.gov/paymentplan or call the customer service number on their IRS notice if they have a DDIA. Q. How do taxpayers stop their DDIAs? (updated July 9, 2020) A. The IRS was unable to halt debit payments from banks for DDIAs during the suspension period. Taxpayers with a DDIA who wanted to suspend their payments during this time needed to 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 ends July 15, 2020. Taxpayers who suspended their installment agreement payments between April 1 and July 15, 2020, will need to resume their payments by their first monthly payment due date after July 15. Taxpayers should be aware that the IRS didn’t default their agreement, but interest did accrue, and the balance remained. Taxpayers who had their bank suspend DDIA payments, should contact the bank immediately to ensure their first monthly payment due date occurring on or after July 15, 2020 is sent to avoid penalties. If a taxpayer can’t meet their current installment agreement terms due to a COVID related hardship, they can revise the agreement on IRS.gov/paymentplan or call the customer service number on their IRS notice if they have a DDIA. Q. Will current Installment Agreements/Payment Plans be automatically suspended? (updated July 9, 2020) A. No. However, taxpayers unable to comply with the terms of their existing agreement, were able to suspend payments due between April 1 and July 15, 2020. As required by law, interest will continue to accrue on any unpaid balances. Taxpayers must resume making payments with their first payment due on or after July 16, 2020 to avoid default. Q. Will taxpayers get monthly payment vouchers during this time? (updated July 9, 2020) A. . The IRS did not mail monthly reminder payment vouchers during the relief period due to IRS office closures caused by COVID-19. The IRS will resume mailing reminder notices as IRS offices re-open. Taxpayers must resume making payments with their first payment due on or after July 16, 2020 to avoid default, even if they do not receive their monthly reminder notice. 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 a 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? (updated July 9, 2020) 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: To protect the health and safety of employees, service may be delayed. The IRS is working to reopen its offices. Check IRS operations and services for the most up-to-date status. Q. How will the suspension period affect my balance due amount and the length of my Installment Agreement/Payment Plan? (updated July 9, 2020) 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. Taxpayers need to resume payments with the first payment due on or after July 16, 2020 to avoid default. Q. What happens to my Installment Agreement/Payment Plan after the suspension period ends? (updated July 9, 2020) 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. Taxpayers experiencing a hardship should contact an IRS representative by calling the number on their agreement notice. Note: To protect the health and safety of employees, service may be delayed. The IRS is working to reopen its offices. Check IRS operations and services for the most up-to-date status. Q. How can I modify my existing Installment Agreement/Payment Plan? (updated July 9, 2020) 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: To protect the health and safety of employees, service may be delayed. The IRS is working to reopen its offices. Check IRS operations and services for the most up-to-date status. Q. What happens if a taxpayer can’t continue their payments after July 15, 2020 due to a COVID hardship? (added July 9, 2020) A. The IRS understands that taxpayers may experience hardships due to COVID. Taxpayers who have a payment agreement should contact a representative using the number on their notice. Note: To protect the health and safety of employees, service may be delayed. The IRS is working to reopen its offices. Check IRS operations and services for the most up-to-date status. Q. What happens if a taxpayer owes taxes and can’t pay in full? (added July 9, 2020) A. The IRS recommends that taxpayers who are unable to pay their taxes in full should act as quickly as possible. Tax bills can quickly accumulate more interest and fees the longer they sit. Most taxpayers have the following payment options: Online Payment Agreement — These are available for individuals who owe $50,000 or less in combined income tax, penalties and interest and businesses that owe $25,000 or less in combined payroll tax, penalties and interest and have filed all tax returns. Most taxpayers qualify for this option, and an Online Payment Agreement can usually be set up in a matter of minutes on IRS.gov/opa. Online Payment Agreements are available Monday – Friday, 6 a.m. to 12:30 a.m.; Saturday, 6 a.m. to 10 p.m.; Sunday, 6 p.m. to midnight. All times are Eastern time. Certain fees may apply. Installment Agreement — Taxpayers who do not qualify to use the online payment agreement option, or choose not to use it, can also apply for a payment plan by phone, or by mail by submitting Form 9465, Installment Agreement Request. Installment agreements paid by direct deposit from a bank account or a payroll deduction will help taxpayers avoid default on their agreements. It also reduces the burden of mailing payments and saves postage costs. Certain fees may apply. Temporarily Delaying Collection — You can contact the IRS to request a temporary delay of the collection process. If the IRS determines a taxpayer is unable to pay, it may delay collection until the taxpayer's financial condition improves. Penalties and interest continue to accrue until the full amount is paid. Offer in Compromise — Certain taxpayers qualify to settle their tax bill for less than the amount they owe by submitting an offer in compromise. To help determine eligibility, use the Offer in Compromise Pre-Qualifier tool. Return to FAQ Menu
