As the COVID-19 pandemic continues to affect the world, many people are struggling to make their ends meet. The Internal Revenue Service (IRS) understands this and has provided various relief measures, including flexible payment options for those who owe taxes. Among these payment options is the IRS Installment Agreement.
What is an IRS Installment Agreement?
An IRS Installment Agreement is a payment plan where taxpayers can pay their tax debts in monthly installments. The plan is open to individuals and businesses that owe less than $50,000 in taxes, penalties, and interest. There are different types of installment agreements, and taxpayers can choose the one that suits their financial situation.
How has COVID-19 affected IRS Installment Agreement Payments?
The IRS has made some adjustments to its installment agreement policies to alleviate the financial burden on taxpayers during the COVID-19 pandemic. In March 2020, the IRS implemented the People First Initiative, providing temporary relief to taxpayers who were struggling financially due to the pandemic. Some of the changes made were:
1. Suspension of Installment Agreement Payments
The IRS suspended installment agreement payments for those who were unable to pay due to COVID-19. Taxpayers were allowed to skip payments without worrying about penalties, interest, or defaulting on their agreements.
2. Extension of Payment Deadlines
The IRS extended payment deadlines for those who could not pay their tax debts. They extended the payment deadline for some taxpayers to July 15, 2020.
3. No Default on Installment Agreements
The IRS did not default on any installment agreements during the pandemic. Taxpayers who missed their payments due to COVID-19 were not penalized.
What do taxpayers need to know about IRS Installment Agreements during COVID-19?
Taxpayers who are currently on an installment agreement or plan to enter into one need to understand how the pandemic affects their payments. Here are some things to consider.
1. Payment Options
Taxpayers have several options for making their installment agreement payments. They can pay online, by mail, or by phone. If they are struggling financially due to COVID-19, they can suspend their payments temporarily.
2. Payment Deadlines
Although the IRS has extended payment deadlines for some taxpayers, those who owe taxes for previous years will still have to pay on time. Taxpayers who cannot meet their payment deadlines should contact the IRS and explain their situation.
3. Penalty Relief
Taxpayers who miss their payments due to COVID-19 can request penalty relief. To get relief, taxpayers need to file Form 1127-A, which allows them to defer payment without interest and penalties.
Conclusion
The IRS Installment Agreement is a useful tool for taxpayers who cannot afford to pay their taxes in one lump sum. The COVID-19 pandemic has created financial difficulties for many taxpayers, and the IRS has made some adjustments to its installment agreement policies to provide relief. Taxpayers should be aware of their payment options, deadlines, and penalty relief options to ensure they are taking advantage of the available support. If you have any questions about your IRS installment agreement payments or need assistance, contact the IRS directly or consult with a tax professional.