If you owe a large sum of money to the IRS, you may be eligible for an installment agreement, which allows you to pay off your debt in monthly installments. However, what happens if you experience a financial hardship and can’t make your payments? This is where an installment agreement forbearance may come in handy.
What is an installment agreement forbearance?
An installment agreement forbearance is a temporary pause on your monthly payments. It is designed for taxpayers who are experiencing a financial hardship and are unable to make their installment agreement payments. The forbearance period typically lasts up to 120 days, during which time you are not required to make any payments.
How does an installment agreement forbearance work?
To request an installment agreement forbearance, you need to contact the IRS and explain your situation. The IRS will review your financial situation and determine if you are eligible for a forbearance. If approved, the IRS will suspend your monthly payments for up to 120 days.
During the forbearance period, interest and penalties continue to accrue on your tax debt. However, the IRS may be willing to waive some of the penalties if you can demonstrate a reasonable cause for your financial hardship. It’s important to keep in mind that the IRS is not required to waive any penalties, and it’s up to their discretion.
After the forbearance period ends, you will need to resume your monthly payments under the original installment agreement. If you are still unable to make your payments, you may need to request an additional forbearance or consider other options, such as an Offer in Compromise.
Who is eligible for an installment agreement forbearance?
To be eligible for an installment agreement forbearance, you must have an existing installment agreement with the IRS and be experiencing a financial hardship. A financial hardship may include a job loss, a medical emergency, or a natural disaster that has affected your ability to pay your tax debt.
You will need to provide documentation to support your financial hardship, such as bank statements, pay stubs, or medical bills. The IRS will review your financial situation and determine if you are eligible for a forbearance.
If you are struggling to make your monthly payments under an installment agreement with the IRS, an installment agreement forbearance may be an option to consider. A forbearance allows you to temporarily pause your payments and can provide some relief during a financial hardship. However, it’s important to keep in mind that interest and penalties continue to accrue during the forbearance period, and you will need to resume your payments once the forbearance ends. If you are unsure if an installment agreement forbearance is right for you, consider speaking with a tax professional or contacting the IRS directly.