Partial Payment Installment Agreement: Pay What You Can
The partial payment installment agreement (PPIA) is an IRS plan that does not pay off the whole debt. You pay each month the largest amount you can afford. Once the IRS collection deadline passes, whatever is left is no longer collected.
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What is a partial payment installment agreement?
When you can pay only part of the debt before the collection deadline, the IRS can agree to a PPIA, per IRM 5.14.2. Per Topic 202, the deadline usually runs 10 years from when the tax was assessed.
A regular long term plan pays off the full balance. Balances that no regular plan could ever cover are what a PPIA is for.
For a PPIA, what does the IRS require?
You need a full financial statement for a PPIA. If you are an individual or self-employed, you use Form 433-A; a business uses Form 433-B. The IRS uses the form to work out the highest amount you can pay each month.
- Only necessary living expenses count. The IRS permits no other costs.
- The IRS looks at how much equity your assets hold and it may ask that you sell one of them or borrow against one first.
- Default within the last 24 months on a plan usually means payments come automatically, taken out of your bank account or by paycheck deduction.
Is a partial payment plan reviewed again by the IRS?
Yes, generally every two years. If your income has risen, the IRS can raise the payment. Keep your returns filed and any new taxes paid on time or the plan may end.
Hardship status, an offer in compromise or a PPIA?
One smaller payment through an offer in compromise ends the debt. If you can pay nothing, collection pauses under currently not collectible status. A PPIA sits between the two: monthly payments continue and the rest expires once the deadline passes.
Partial payment plans: your questions
Can the IRS extend the 10-year deadline for a PPIA?
In rare cases only. According to the IRS manual, it is capped at five years past the original deadline and up to one more year may be added. A manager has to approve it.
Can you apply for a PPIA online?
The standard online form is not an option. Since a PPIA needs a full financial statement, you arrange it together with an IRS officer, by phone or by mail. A tax pro can submit the request with you.
Is a PPIA better than a regular payment plan?
Only if no regular plan can cover what you owe before the deadline. Try the payment plan calculator to see what a full plan costs you each month.
Is the amount you owe more than you could ever pay off?
A licensed tax pro can work out what the IRS expects each month and whether a PPIA, an offer or a pause suits you. Or put your number into the form.
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