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IRS Makes it Easier to Set Up Tax Payment Arrangements

The IRS recently announced a number of changes designed to help struggling taxpayers impacted by COVID-19 more easily settle their tax debts with the IRS.

Payment Arrangement Changes

Short-term Payment Plans. IRS offers options for short-term and long-term payment plans, including Installment Agreements via the Online Payment Agreement system. This service is generally available to individuals who owe $50,000 or less in combined income tax, penalties, and interest or businesses that owe $25,000 or less combined that have filed all tax returns. These plans can now be extended from 120 to 180 days for certain taxpayers.

Installment Agreements.  Installment Agreement options are available for taxpayers who cannot fully pay their balance but can pay over time. Installment Agreement options have been expanded to remove the requirement for financial statements and substantiation in more circumstances for balances owed up to $250,000 if the proposed monthly payment is sufficient. 

Some individual taxpayers who only owe less than $250,000 for the 2019 tax year may qualify to set up an Installment Agreement without a notice of federal tax lien filed by the IRS.

Qualified taxpayers with existing Direct Debit Installment Agreements may now be able to use the Online Payment Agreement system to propose lower monthly payments and change their due dates.

Temporarily Delaying Collection. Taxpayers can contact the IRS to request a temporary delay in collection. If the IRS determines that a taxpayer is unable to pay, the collection may be delayed until the taxpayer’s financial condition improves.

Offers in Compromise. Certain taxpayers can settle their tax bills for less than the amount they owe by submitting an Offer in Compromise. In order to help determine eligibility, taxpayers should use the Offer in Compromise Pre-Qualifier tool. The IRS is now offering additional flexibility for some taxpayers who are temporarily unable to meet the payment terms of an accepted offer in compromise.

Relief from Penalties. The IRS is highlighting reasonable cause assistance available for taxpayers with failure to file, pay, and deposit penalties. First-time abatement relief is also available for the first time a taxpayer is subject to one or more of these tax penalties.

Taxpayer Actions Regarding Tax Payment Relief. 

All taxpayers can access additional information on IRS.gov. Many taxpayers requesting payment plans can apply through IRS.gov without ever having to talk to a representative.

The IRS reminds taxpayers they must be responsive when they receive a balance due notice.

If you would like additional information please contact your Gettry Marcus Tax Advisor.