Skipping a payment on an IRS installment agreement is possible, but it costs you money and extends your debt
You can request to skip or defer one or more payments on an IRS installment plan, but the IRS does not simply erase the skipped amount. Instead, the unpaid balance rolls forward, you continue to accrue interest and penalties on it, and your agreement may be modified to add months to the end of your plan. The IRS charges interest daily on what you owe—currently around 8% per year, though this rate changes quarterly—so skipping a payment means you are paying more total interest over the life of the agreement.
The process for requesting a skip or deferral depends on which type of installment agreement you have and how you set it up. If you have a payment plan through the IRS website or through a payment processor, you may be able to request a temporary deferral online. If your agreement was set up by phone or mail, you will need to contact the IRS directly to request the change.
Key Takeaways
- Skipping an IRS payment does not forgive the amount owed; it defers it and adds interest and penalties to your total debt.
- You can request a temporary deferral (usually up to 120 days) through the IRS website if you have an online payment agreement, or by calling the IRS at 1-800-829-1040.
- Each skipped payment extends your agreement by one month and increases the total interest you will pay over time.
- If you skip payments without requesting approval, your agreement may be terminated and the full remaining balance could become due immediately.
- Hardship status with the IRS may allow you to pause payments temporarily without the same penalties, but you must request this status separately.
How skipping a payment changes your agreement
When you skip a payment on an IRS installment plan, the IRS does not reduce what you owe—it simply moves the due date forward. If your agreement calls for 60 monthly payments of $500 each, and you skip month three, you now owe that $500 plus interest in month four, and your agreement extends to month 61 instead of month 60.
The interest clock does not stop. The IRS charges interest on the unpaid balance every single day. As of 2024, the interest rate is 8% per year, compounded daily, though the IRS adjusts this rate quarterly. On a $500 skipped payment, you will owe roughly $40 in additional interest by the time you make up the payment a month later—money that would not have accrued if you had paid on time.
Penalties also continue to accrue. If you have a failure-to-pay penalty on your account (typically 0.5% of the unpaid balance per month), it applies to the skipped amount just as it does to the rest of your debt. Skipping payments does not stop the penalty clock.
Requesting a temporary deferral through the IRS
The IRS allows temporary deferrals of up to 120 days on most installment agreements. This is different from skipping a payment—a deferral is an official pause that you request and the IRS approves, rather than simply not paying and hoping the IRS does not notice.
If you set up your payment plan online through IRS.gov, you can log into your account and request a deferral directly. The system will ask you to confirm that you are experiencing a temporary hardship and cannot make the next payment. The IRS typically responds to online deferral requests within a few business days.
If your agreement was set up by phone or mail, call the IRS at 1-800-829-1040 during business hours (Monday through Friday, 7 a.m. to 7 p.m. your local time). Have your Social Security number, the tax year in question, and your current payment amount ready. The IRS representative can request a deferral on your behalf and will send you written confirmation of the new payment schedule.
A deferral still costs you interest and penalties on the deferred amount, but it protects you from having your agreement terminated for non-payment. If you simply skip a payment without requesting approval, the IRS may treat it as a default and cancel your agreement, making the entire remaining balance due immediately.
What happens if you miss a payment without requesting a deferral
Missing a payment on an IRS installment agreement without notifying the IRS first is risky. The IRS considers your agreement in default if you miss a payment by more than a few days, depending on the type of agreement you have. Once your agreement is in default, the IRS can terminate it and demand full payment of the remaining balance.
You will also face additional penalties. The failure-to-pay penalty increases, and you may be charged a failure-to-file penalty if the IRS believes you are deliberately avoiding payment. The IRS can also file a notice of federal tax lien against your property, which damages your credit and gives the government a legal claim to your assets.
If your agreement is terminated, the IRS will send you a notice (usually Form 668(a), Notice of Federal Tax Lien, or a letter explaining the termination). You then have options: you can request that the agreement be reinstated, set up a new agreement, or request a hardship status that temporarily pauses collection activity. But the fastest way to avoid this situation is to request a deferral before you miss the payment.
Hardship status as an alternative to skipping payments
If you are experiencing severe financial hardship—meaning you cannot afford basic living expenses like food, housing, or medical care—you can request that the IRS place your account in hardship status. This is different from a deferral and offers more protection, though it requires you to prove your hardship to the IRS.
While your account is in hardship status, the IRS pauses collection activity, which includes suspending your installment agreement. You do not make payments during this period, but interest and penalties continue to accrue on your debt. Hardship status is temporary; the IRS reviews your account periodically to see if your situation has improved.
To request hardship status, call the IRS at 1-800-829-1040 and explain your situation to a representative. You may be asked to provide documentation of your income, expenses, and assets. The IRS uses this information to determine whether you may have access to for hardship status. There is no formal application form; the information is made during your phone call or through correspondence.
Comparing your options: deferral, skip, or hardship
| Option | How it works | Cost to you | Risk if you do not request it |
|---|---|---|---|
| Temporary deferral | You request approval to pause payments for up to 120 days. Agreement extends by the number of months deferred. | Interest and penalties continue on unpaid balance. Agreement extends, so you pay more total interest over time. | If you miss a payment without requesting a deferral, your agreement may be terminated and full balance becomes due. |
| Skipping without approval | You simply do not pay. The IRS may treat this as default. | Interest, penalties, and potential default fees. Agreement may be terminated. | Agreement termination, federal tax lien, increased penalties, and demand for full payment. |
| Hardship status | You request that the IRS pause collection activity due to severe financial hardship. Requires proof of hardship. | Interest and penalties continue, but no payment obligation during hardship period. | If you do not request it and miss payments, your agreement is terminated and full balance becomes due. |
How to request a deferral if you cannot pay this month
The sooner you contact the IRS, the better. Do not wait until the payment due date passes. If you know you cannot make a payment, request a deferral at least a few days before the due date.
Online: Log into your IRS account at IRS.gov, find your installment agreement, and select the option to request a deferral. You will be asked to confirm your hardship and provide a reason. The IRS will respond within a few business days with a new payment schedule.
By phone: Call 1-800-829-1040 Monday through Friday, 7 a.m. to 7 p.m. your local time. Tell the representative you have an installment agreement and need to request a deferral. Have your Social Security number and tax year ready. The representative will process your request and send written confirmation by mail.
By mail: Send a letter to the IRS address shown on your installment agreement notice. Include your name, Social Security number, tax year, and a brief explanation of why you need to defer the payment. Mail it at least two weeks before your payment due date to allow time for processing.
Frequently Asked Questions
Will skipping one payment ruin my installment agreement?
One missed payment without approval can trigger default and termination of your agreement. Requesting a deferral before you miss the payment protects you from this outcome. If you have already missed a payment, contact the IRS immediately to request reinstatement or a new agreement.
Can I skip multiple payments in a row?
You can request a deferral of up to 120 days, which covers roughly four months of payments. After 120 days, you must resume payments or request another deferral. The IRS does not allow indefinite skipping; at some point you must either pay or request hardship status.
Does the IRS charge a fee to request a deferral?
No, there is no fee to request a deferral. However, interest and penalties continue to accrue on the deferred amount, so the cost comes in the form of additional interest, not an upfront charge.
What if I cannot afford to resume payments after a deferral ends?
Contact the IRS before the deferral period ends and request another deferral, or ask about hardship status if your financial situation has not improved. If you simply stop paying, your agreement will be terminated.
Does a deferral affect my credit score?
A deferral itself does not appear on your credit report. However, if your agreement is terminated due to non-payment, the IRS may file a federal tax lien, which does appear on your credit report and damages your score.