TAS Tax Tip: Here’s how you can suspend IRS Installment Agreement payments

April 17, 2020

 
The IRS People First Initiative, announced on March 25, gives taxpayers the option to suspend installment agreement payments due through July 15:

Existing Installment Agreements – For taxpayers under an existing Installment Agreement, 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 during this period. By law, interest will continue to accrue on any unpaid balances.

But a lot of IRS sites are closed or at low capacity, so how can you suspend payments without calling the IRS?

How to Suspend Payments

  • Regular Installment Agreements (IAs) (where you send payments directly to the IRS): You can choose to simply not make payments through July 15. There is no need to inform the IRS. The IRS will not let the agreement go into default.

For other types of installment agreements, shown below, the IRS will continue to debit payments from banks and employers during the suspension period. These installment agreements will not be defaulted for missing payments, at least through July 15.

However, if you need to suspend these types of installment payments, due to financial reasons, you need to take the actions listed below:

  • Direct Debit Installment Agreements (DDIAs) (where payments are automatically taken from a designated bank account):

    • Contact your bank directly, share the IRS People First Initiative information, and ask them to temporarily stop deductions. Banks are required to comply with customer requests to stop recurring payments within a specified timeframe.

  • Payroll Deduction Installment Agreements (PDIAs) (where payments are taken from your paycheck):

    • Contact your employer, share the IRS People First Initiative information, and ask the employer to not deduct or send payments from their pay to the IRS through July 15.

Re-start Payments Before July 15

Please note that if payments are stopped, in order to avoid possible default of the agreement once the suspension period expires on July 15, 2020, taxpayers must resume payments as of that date.

For DDIAs and PDIAs, taxpayers must inform their bank or their employer, respectively, to allow the debits to resume at least two weeks before their next payment is due.

Before Suspending Payments

However, before you make the decision to suspend payments, please understand that, by law, interest will continue to accrue on any unpaid balances. So, if you are in a position where you can continue these payments without financial hardship, then you should consider continuing the payments to reduce the interest charges.

Taxpayer Advocate Service Assistance

Know that TAS is open to virtually serve taxpayers who find themselves in hardship situations or dealing with IRS tax problems they’ve been unable to resolve directly with the IRS. So, if you cannot stop payments for DDIAs or PDIAs, after making contacts as instructed above, go to our Contact Us page and call the local number listed for your state or area.

Please understand though, that TAS cannot currently help you get any Economic Impact Payments before the IRS releases them.

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