IRS Installment Agreements and COVID-19: What You Need to Know
The COVID-19 pandemic has caused financial hardship for millions of individuals and businesses, making it difficult for them to pay their tax debts. In response, the Internal Revenue Service (IRS) has implemented various relief measures, including installment agreements, to help taxpayers manage their tax debts. In this article, we will discuss how you can take advantage of IRS installment agreements during the COVID-19 pandemic.
What is an IRS Installment Agreement?
An IRS installment agreement is a payment plan that allows taxpayers to pay their tax debts in installments over time. Taxpayers can request an installment agreement to pay off their tax debts if they cannot pay the full amount owed at once. The IRS offers several types of installment agreements, including:
– Guaranteed Installment Agreement: This type of agreement is available to taxpayers who owe less than $10,000 in tax debts and can pay off the debt within three years.
– Streamlined Installment Agreement: This type of agreement is available to taxpayers who owe less than $50,000 in tax debts and can pay off the debt within six years.
– Partial Payment Installment Agreement: This type of agreement is available to taxpayers who cannot pay their tax debts in full but can pay a partial amount over time. The IRS will review the taxpayer`s financial situation to determine the monthly payment amount.
How Can You Apply for an IRS Installment Agreement During COVID-19?
The IRS offers several options for taxpayers to apply for an installment agreement, including online, by phone, or by mail. However, due to the pandemic, the IRS has temporarily suspended the requirement for taxpayers to submit a financial statement when applying for an installment agreement for tax debts up to $250,000. This means that taxpayers can apply for a streamlined or guaranteed installment agreement without providing financial statements to the IRS.
To apply for an online installment agreement, taxpayers must visit the IRS website and complete the Online Payment Agreement tool. The tool will notify taxpayers if they are eligible for an installment agreement and provide payment options.
To apply for an installment agreement by phone, taxpayers can contact the IRS at 1-800-829-1040.
To apply for an installment agreement by mail, taxpayers must fill out Form 9465, Installment Agreement Request, and mail it to the IRS. The form requires taxpayers to provide their personal information, tax liabilities, and proposed payment amounts.
What Are the Benefits of an IRS Installment Agreement During COVID-19?
An IRS installment agreement can provide several benefits for taxpayers during the pandemic, including:
– Reduced Financial Burden: Taxpayers can pay off their tax debts over time and avoid the financial burden of paying the full amount owed at once.
– Relief from Tax Penalties: The IRS may waive or reduce tax penalties for taxpayers who enter into an installment agreement.
– Avoidance of Tax Liens: An IRS installment agreement can prevent the IRS from placing a tax lien on a taxpayer`s property or assets.
Conclusion
The COVID-19 pandemic has caused financial hardship for many taxpayers, making it difficult for them to pay their tax debts. IRS installment agreements can help taxpayers manage their tax debts and avoid financial burdens. Taxpayers can apply for an installment agreement online, by phone, or by mail. During the pandemic, the IRS has temporarily suspended the requirement for taxpayers to submit financial statements for tax debts up to $250,000. If you are facing financial difficulties during the pandemic, consider applying for an IRS installment agreement to manage your tax debts.