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Suspended Installment Payments

Suspended Installment Payments

IRS has updated its website on which it provides answers to taxpayers with existing installment agreements about the suspension through July 15, 2020 of due dates under those agreements.

The IRS People First Initiative, announced in IR 2020-59, allowed taxpayers with an installment agreement, including a direct debit installment agreement, to suspend any installment payments due between April 1, 2020 and July 15, 2020 (“suspension period”).

In addition, IRS did not default any installment agreements for nonpayment between April 1, 2020 and July 15, 2020. However, by law, interest continued to accrue on any unpaid balances. (IR 2020-59).

In June, IRS provided answers to frequently asked questions (FAQs) about the suspended due dates, under the People First Initiative, for installment agreement payments.

IRS's updated FAQs include the following updates:

  • Reminder regarding interest and penalties while installment agreement is in effect.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% per month is reduced to 0.25%.
  • Where taxpayer is unable to meet his current installment agreement terms.If a taxpayer cannot meet their current installment agreement terms due to a COVID related hardship, they can revise the agreement on plan or call the customer service number on their IRS notice if they have a Direct Debit Installment Agreement.
  • IRS monthly payment vouchers.IRS did not mail monthly reminder payment vouchers during the suspension period due to IRS office closures caused by COVID-19. 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.
  • Continued delays in processing.IRS notes that its service to taxpayers may still be delayed. IRS is working to reopen its offices. Taxpayers should "check IRS operations and services for the most up-to-date status".