IRS Installment Agreement FAQ

December 18, 2020

The Internal Revenue Service allows taxpayers to pay what they owe in installments if they cannot accommodate income tax amounts in lump form. In light of COVID-19, the IRS has created the People First Initiative that “temporarily adjusted and suspended” its compliance programs. Take a moment to learn what your Encino tax consultants want you to know about installment agreements. 

What Happens if You Miss a Payment? 

Taxpayers who miss installment payments due to employment challenges or other problems might receive Notice CP 523s from the IRS. The notice informs taxpayers of their past due payments and the intention to levy assets. If you miss a payment for any reason, contact the IRS immediately to discuss payment extensions. 

How Can I Change an Existing Payment Agreement? 

To modify an existing agreement, use the Online Payment Agreement application provided by the IRS. Service might be delayed due to COVID-19 complications. Payment modifications are also not available for direct debit installment agreements where money is automatically deducted from bank accounts every month. 

What are the Other Payment Methods the IRS Accepts? 

In addition to direct debit payments, the IRS accepts credit cards, personal checks, money orders, payroll debits from employment checks, and Electronic Federal Tax Payment System (EFTPS) options. The IRS prefers payments from payroll and direct debits, but do not fret if other payment methods are best for you. As long as they are accepted by the agency and you make your payments on time, there is no need to worry. 

Can I Appeal an Agreement Installment Plan Termination? 

If the IRS informs you that it is terminating your payment plan because you have not paid by the appropriate deadlines, it is possible to appeal the termination using the Collection Appeals Program (CAP). The program is designed for agreements that have been terminated or rejected; however, it is not possible to “appeal an appeal” once the final decision about the account has been made. A judicial review of your appeal is subsequently not available. Working with your Los Angeles accounting service is the best option to avoid appeal-related difficulties. 

Discuss your tax prep and payment needs today with the Los Angeles accountants at Wallace & Associates.