Does offset still happen when you are already on an installment agreement?

Yes, if you are due a refund, they will take your refund and apply it against the amount owed.

Please see Xmasbaby0's answer below.

Edited

Sorry, that is incorrect.  The iRS will take your refund even when you are on a payment plan.

Thanks! You are correct.

You're welcome.  Don't want someone to get a nasty surprise.