Can’t Afford Your Tax Bill? A Partial Pay Installment Agreement (PPIA) Might Be the Answer

If you owe the Internal Revenue Service (IRS) more than you can afford to pay, you might think your only option is an Offer in Compromise (OIC). But there's another powerful tool the IRS offers: the Partial Pay Installment Agreement (PPIA). This lesser-known option could help you resolve your tax debt while paying only what you can reasonably afford—and nothing more.

What Is a Partial Pay Installment Agreement (PPIA)?

The IRS collection statute of limitations, also known as the Collection Statute Expiration Date (CSED), generally dictates that the IRS has 10 years from the date of tax assessment to collect outstanding tax liabilities. In other words, if Bob files his 2017 tax return on March 10, 2018 and the IRS assesses the tax on May 1, 2018, the IRS has until April 30, 2028 to collect the assessed taxes for 2017. A PPIA is a formal agreement with the IRS that allows you to make monthly payments based on your financial ability, even if the total payments won't cover your full tax debt before the 10-year collection statute expires.

Let's return to Bob. Let's say that the IRS assesses a $100,000 tax for tax year 2017 on May 1, 2018. This means that the IRS has until April 30, 2028 to collect the $100,000 from Bob. However, Bob's income is not what it used to be and he can only pay $100 per month now. Bob does not qualify for a Regular Installment Agreement because even after paying $100 per month over 10 years, he would have only paid $12,000. Additionally, it is now the year 2025 and there are only three years left for the IRS to collect. This is where Bob may benefit from negotiating a PPIA. A PPIA is not automatically granted, but if it is accepted, the IRS will accept a partial payment as payment in full.

If the IRS accepts a PPIA, it means:

• You won't have to pay the full amount owed

• Once the collection window closes, the remaining balance is forgiven

• You stay in compliance and avoid aggressive collection actions, such as wage garnishments or property seizures.

How Is a PPIA Different from a Regular Installment Agreement?

Feature	Regular Installment Agreement	Partial Pay Installment Agreement
Pays full tax debt?	Yes	No
Based on financial hardship?	Not necessarily	Yes
Balance forgiven after 10 years?	No	Yes
Requires detailed financials?	Sometimes	Always

Who Qualifies for a PPIA?

To qualify for a PPIA you must:

• Owe back taxes to the IRS (at least $10,000)

• Be able to make a monthly payment, but not enough to pay in full before the statute expires

• Did not qualify for an offer in compromise (OIC)

• Provide detailed financial information (Form 433-A or 433-F) that supports your inability to pay in full

• Not be in bankruptcy proceeding

• Stay current on all future filings and payments

The IRS will carefully review your income, expenses, assets, and equity to determine your "ability to pay.' If you have little or no disposable income, a PPIA could be your best path forward. Working with a tax professional tax specializes in these procedures can really make the difference between a successful PPIA request and an unsuccessful one.

Pros and Cons of a PPIA

Pros:

• Significantly reduced overall repayment

• Stops IRS enforcement actions (like levies and garnishments)

• No need to settle for a lump sum like with an OIC

Cons:

• Requires full financial disclosure (Form 433-A or 433-F)

• The IRS may revisit your case every two years

• Interest and penalties continue to accrue during the agreement

Take the First Step Toward Relief

You don’t have to live in fear of the IRS. If you're struggling with tax debt and can't afford full payment, a Partial Pay Installment Agreement might be the solution you've been looking for. At GP Advisory, P.C., we specialize in helping people just like you navigate complex tax problems by completing a full financial analysis of your situation, helping you decide whether a PPIA or OIC and represent you before the IRS to negotiate on your behalf.

Call GP Advisory, P.C. today for a free consultation at 888-927-7775.