The IRS People First Initiative, announced on March 25th, gives taxpayers the option to suspend installment agreement payments through July 15th. 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 so choose. Furthermore, the IRS will not default any Installment Agreements during this period. By law, however, interest will continue to accrue on any unpaid balances.
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 15th. There is no need to inform the IRS. The IRS will not let the agreement go into default.
For other types of installment agreements, described 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 15th. 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 15th.
Re-start Payments Before July 15th
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. Thus, 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 (TAS) Assistance
Know that TAS is open to virtually serve taxpayers who find themselves in hardship situations or dealing with IRS tax problems they have been unable to resolve directly with the IRS. So, if you cannot stop payments for DDIAs or PDIAs after following the instructions above, go to TAS's 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.
See the following resources for more information:
Want to learn more about your tax rights and responsibilities? Visit www.MyTaxRights.org. for other beneficial resources and information.