Installment Agreements Irs Covid

Installment Agreements and the IRS During COVID-19

In the wake of the COVID-19 pandemic, many individuals and businesses are struggling financially. This includes falling behind on tax payments owed to the Internal Revenue Service (IRS). However, the IRS offers relief options for those who are unable to pay their taxes in full. One such option is an installment agreement.

What is an installment agreement?

An installment agreement is an agreement between the taxpayer and the IRS to pay off their tax debt in monthly installments. The IRS will generally approve an installment agreement if the taxpayer meets certain criteria. This includes owing $50,000 or less in combined tax, penalties, and interest, and being able to pay off the debt within 72 months.

How has COVID-19 affected installment agreements?

Due to the financial hardships many individuals and businesses are facing as a result of the pandemic, the IRS has made changes to their installment agreement process. These changes include:

1. Increased flexibility in payment terms: The IRS is allowing taxpayers more time to pay off their tax debt. This includes extending the payment term from 72 months to 84 months.

2. Relief for taxpayers who are unable to make payments: If a taxpayer is unable to make payments due to financial hardship caused by COVID-19, the IRS may temporarily postpone payments or reduce the amount owed.

3. Waiving of penalties: The IRS is waiving certain penalties for taxpayers who are unable to pay their taxes due to COVID-19 related financial hardships.

How to apply for an installment agreement

To apply for an installment agreement, taxpayers must fill out Form 9465, Installment Agreement Request. This form can be found on the IRS website. Taxpayers must also provide financial information, such as income and expenses, to show that they are unable to pay the full amount owed.

It is important to note that interest and penalties will continue to accrue on the outstanding balance until the debt is paid in full, even if an installment agreement is approved.

In conclusion, the IRS is offering relief options for taxpayers who are struggling to pay their taxes due to COVID-19 related financial hardships. An installment agreement is one option available to those who owe $50,000 or less in combined tax, penalties, and interest. The IRS has made changes to their installment agreement process to offer more flexibility and relief for those who need it. If you are struggling to pay your taxes, contact the IRS or a tax professional to discuss your options.