Service Members and Veterans Who Owe the IRS

Combat zone and contingency service: IRS deadlines pause

Under Internal Revenue Code section 7508, the time you serve in a combat zone, or deployed outside the United States in a contingency operation designated by the Secretary of Defense, plus any continuous qualified hospitalization for an injury received there and the next 180 days, is disregarded for a long list of tax deadlines. The list in the statute includes:

• filing returns and paying income, employment and other taxes, including installments;
• assessment of any tax by the IRS;
• notices and demands for payment;
• “collection, by the Secretary, by levy or otherwise” of any tax liability;
• filing a Tax Court petition or a refund claim; and
• certification of a seriously delinquent tax balance for passport purposes (section 7508(a)(3)).

IRS Publication 3 (2025) adds that the deadline is extended by the 180 days plus the days that were left to act when you entered the combat zone, and that “no penalties or interest will be imposed for failure to file a return or pay taxes during the extension period.” The IRS also says it works with the Department of Defense to suspend compliance actions, “such as audits or enforced collections,” until 180 days after you leave the zone.

The protection also covers your spouse, with two exceptions listed in Publication 3: it does not apply to a spouse for any period you are hospitalized in the United States, or for tax years beginning more than 2 years after the area stops being a combat zone. Civilians serving in the zone in support of the Armed Forces, such as Red Cross personnel and civilians acting under military direction, also qualify; employees of defense contractors working elsewhere do not. Time hospitalized in the United States counts for at most 5 years, and the hospitalization part does not extend the IRS’s collection period (IRC 7508(e)(3)).

Tell the IRS you qualify, and what to do if a notice arrives anyway

The statute lets the IRS assess and collect unless it has learned before acting that you are entitled to the extension (IRC 7508(e)(2)). In practice, notices can still be issued while you are deployed. Two ways to close that gap:

1. Email the IRS. The IRS accepts notice at combatzone@irs.gov. Give your name, stateside address, date of birth and deployment date, and attach an official document showing the area or operation. The IRS says not to include Social Security numbers in the email and that account answers come by regular mail.
2. Contact your legal assistance office if the IRS takes a covered action or sends an examination notice before learning about your service, as Publication 3 advises.

The IRS combat zone Q&As tell families filing under the extension to put “COMBAT ZONE” in red at the top of the return. If a balance-due notice such as a CP14 or a CP504 reaches your family at home, they or a representative you have authorized should answer it rather than letting it sit. Combat zone time also pauses passport certification for a seriously delinquent balance; see passport revocation for unpaid taxes.

Payment plans and old balances during deployment

If you were already on an installment agreement before deploying to a combat zone, the IRS combat zone Q&As say the member “will not have to make payments on his past due taxes for his period of service in the combat zone plus 180 days,” and no additional penalties or interest are charged during that extension period. The IRS says to contact the IRS office where you make payments. Confirm in writing that the IRS has recorded the pause, because a missed payment otherwise leads to a CP523 notice of intent to end the plan.

Payments resume after the extension. Interest and penalties then continue as on any balance: interest at the federal short-term rate plus 3 percentage points, reset quarterly (7% (IRS.gov, Jul-Dec 2026) this quarter).

Tax owed before active duty: the SCRA interest cap and payment deferral

The Servicemembers Civil Relief Act gives two protections that apply to IRS income tax balances, as IRS Publication 3 describes them:

A granted deferral gives you up to 180 days after release to pay without interest or penalties for that period, and the IRS collection period is suspended during service plus 270 days. The IRS answers deferral requests in writing. National Guard members qualify for service under a federal call to active service of more than 30 consecutive days for a declared national emergency, as Publication 3 explains.

Veterans: what the IRS can and cannot levy

Once a veteran has received the required notices, the IRS can levy wages, bank accounts and many federal payments. Two rules matter most:

• VA disability benefits are protected. IRC 6334(a)(10) exempts from levy any amount payable as a service-connected disability benefit under the listed chapters of title 38. VA disability compensation and pension payments are also not taxable income, per IRS Publication 525.
• Military retirement pay can be levied. The IRS lists military retirement among the payments in its Federal Payment Levy Program, which takes up to 15% (IRS.gov, 2026) of each payment, or the amount owed if less. Before this levy starts, the IRS normally sends a final notice such as a CP90 and waits 30 days.

The IRS says the program will not include your payments while you are in bankruptcy, have applied for innocent or injured spouse relief, have made other payment arrangements, or are in a hardship status. Social Security benefits can also be levied this way; see can the IRS take Social Security. For levy steps and how to stop them, see the best ways to stop an IRS levy.

Your options once the military protections end

Penalties from years when deployment or injury kept you from filing may be removable for reasonable cause or under the Automatic Exemption from Penalty (IR-2026-83 (IRS.gov, July 2026)); see penalty relief. To stop collection while you decide, read how to pause IRS collection, and for larger balances, relief by balance size.

Records to gather, and a worked example

• Orders, deployment and return dates, and any document naming the combat zone or operation.
• Hospitalization dates if you were injured.
• IRS notices and your account transcript, plus any installment agreement letters.
• Leave and earnings statements before and during service, for an SCRA request.
• VA award letters and retirement pay statements, if you are a veteran facing a levy.

Free help for service members and veterans, and when to hire someone

Free help is broad here. Base legal assistance offices handle combat zone notices. The military VITA program prepares returns and knows combat zone rules, and the Department of Defense offers MilTax, a free tax service through Military OneSource, to members and qualified veterans. The Taxpayer Advocate Service is free when an IRS problem causes hardship or is stuck (877-777-4778 (IRS.gov, 2026), or Form 911, Rev. 6-2026 (IRS.gov, 6-2026)). Low Income Taxpayer Clinics represent eligible taxpayers for free or a small fee. Your collection rights are summarized in your IRS collection rights.

A professional is worth it when several years are unfiled, the IRS levied before applying your combat zone or SCRA rights, a military retirement levy is already running, or the balance is beyond the plan limits. A representative can act under Form 2848 while you are deployed. Request a free review or read what a free consultation covers; if free military help will solve it, we will say so.

Frequently asked questions

Keep reading in the Tax Liability Guide

• How to pause IRS collectionEvery way to stop levies while you sort it out.
• Your IRS collection rightsHearings, appeals and what the IRS must do first.
• Relief by balance sizeWhich options fit what you owe.
• Passport revocationWhen a balance can affect your passport.
• Currently not collectibleThe IRS hardship pause, in full.
• Free consultationWhat a free review covers and what it won't do.