IRS Suspends Many Installment Payments Until July

To help people undergoing hardships as a result of the COVID-19 crisis, the IRS has launched a set of new policies called the People First Initiative (PFI). The initiative provides temporary relief from certain payment obligations for many taxpayers, including those who either have an existing IRS installment payment plan, or are considering entering into such a plan.

For existing installment agreements, payments due between April 1 and July 15, 2020 are suspended at the taxpayer’s discretion. In other words, if you are currently unable to make the payments required under your installment agreement (including Direct Debit payments), you may discontinue your payments until July 15. However, if you can make any payments during this period you should do so, since interest will continue to accumulate on unpaid balances.

The IRS strongly encourages taxpayers who cannot afford to pay their federal taxes to enter into a new installment agreement as soon as possible. The April 1-July 15 payment suspension period will apply to new agreements as well as existing ones.

A tax professional can help you determine your eligibility to suspend your installment tax payments, and whether it is best to do so. The IRS will not default any installment agreements during the suspension period. In addition, many collection activities, such as liens, levies, and referrals to third-party collection agencies, have been suspended until July 15. However, field collection officers may continue to pursue compliance from some high-income taxpayers.