The Partial Payment Installment Agreement (PPIA) is just the same with a regular installment agreement where you pay for your tax debts to the IRS on a monthly basis.
You should disclose your financial information to the IRS to apply for PPIA. Those information should include your income, debts, assets, and expenses.
Partial Payment Installment Agreements are more difficult to apply and get accepted than other types of Installment Agreements, but they are easier to get compared to an Offer in Compromise.
The IRS only accepts these agreements if you are running out of assets to liquidate and monthly disposable income for you to get into an installment agreement. The IRS is also certain that you lack the capability and resources to earn enough money to pay off your debts over the years.
The Collection Information Statement will assess your monthly payment. Individuals will have to accomplish 433-A while businesses will fill out 433-B form. These forms will give IRS the judgment on how much you are capable of paying.
The Partial Payment Installment Agreement allows you to pay less than your original tax debt because when the collection statute expiration date (CSED) expires for each year you were assessed then the debt turns out to be “uncollectible.” The CSED’s time frame is usually 10 years from the date the taxes were assessed.
What are the Requirements for a Partial Payment Installment Agreement?
- You have some ability to settle your debts to the IRS, but you cannot pay in full
- You tax debt is more than $10,000 which includes penalties and interests
- Filled out Form 433 (Collection Information Statement)
- Filled out Form 9465 (Installment Agreement Request) or applied for Installment Agreement online
- Filed all past tax returns
- Have not filed bankruptcy or in the state of bankruptcy
- No Offer in Compromise accepted
- No assets or cannot obtain equity in assets for the following reasons:
- Assets are not marketable
- The value of assets would not suffice the amount of tax debt
- Assets won’t be enough to be considered as a collateral to get a loan
- Your non-liable spouse did not agree to have the assets sold
- Selling the assets would make you struggle financially
How to Request a Partial Payment Installment Agreement
- An individual should accomplish and print Form 433-A, while a business should use Form 433-B. You must prepare documentation for expenses and income you detailed on Form 433
- Fill out and print Form 9465 (Installment Agreement Request) or apply for an Installment Agreement online
- Give an estimated amount of what you think you could pay each month. The IRS assesses the maximum monthly payment based on Form 433. Your monthly payment must cover your tax debt, but you should consider what you are capable of paying. If you have missed payments, you will have to pay $89 for the reinstatement fee or you may lose the agreement.
- Send forms 9465 and 433 along with the copy of tax return to the IRS. But when you e-file, you won’t need a copy of your return. To be safe, send your first payment plus the installment fee with your application. The fee is usually $225, but a direct debit is lower at $107
- Wait until the IRS responds to your request. It would take 30 days for the IRS to respond
- If there’s no response within a month, make sure to continue your monthly payments but contact the IRS directly
A Partial Payment Installment can be your option if you are uncertain with making monthly payments on a regular installment agreement. If your collection information statement or Form 433 clearly shows that you aren’t capable of paying the IRS at least $25 per month then you may have a non-collectible status.