Some taxpayers can’t afford the payment on a standard IRS installment agreement. The monthly number is real, and it’s still more than they have.
A Partial Pay Installment Agreement, or PPIA, exists for that gap. It lets you pay what your financials show you can afford, even when those payments will never satisfy the full balance.
How a PPIA Works
The IRS generally has ten years to collect an assessed tax. That deadline is the Collection Statute Expiration Date, or CSED. A standard installment agreement pays the balance in full before the CSED runs. A PPIA doesn’t. You pay the affordable amount, the statute expires, and the unpaid balance expires with it.
The IRS agrees to this because your financial statement shows the math. That statement is the entire basis of the agreement, which is why the documentation behind it has to hold up.
Example
Angela owed $94,000 after several years of uneven income. She could pay something every month, but nowhere near enough to clear the balance before her collection statutes expired.
Her representative prepared a complete financial statement showing limited disposable income, backed by documentation of her income, expenses, and assets. The IRS approved a Partial Pay Installment Agreement at a payment she could make. The balance she can’t pay will expire when the statutes run out.
What to Expect If You’re Approved
- The IRS generally reviews the agreement about every two years and can raise the payment if your finances improve
- Equity matters. The IRS may expect you to borrow against or sell an asset before it agrees to a partial payment
- A Notice of Federal Tax Lien is likely
- You have to stay current. File on time and pay on time every year the agreement is open, or it defaults
How We Can Help
Ron Friedman CPA evaluates whether a PPIA fits your numbers, prepares the financial statement and supporting documentation, negotiates the payment amount, and handles communication with the IRS so enforcement doesn’t start while your request is pending.
If you owe the IRS and a standard payment plan isn’t realistic, call Ron Friedman CPA at 914.712.6919 for a confidential consultation.
