Partial Payment Installment Agreement

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A Partial Payment Installment Agreement (PPIA) is a hybrid resolution option that combines elements of an installment agreement and an Offer in Compromise. Like a standard installment agreement, you make monthly payments to the IRS — but unlike a standard agreement, your payments are based on what you can actually afford rather than what it would take to pay off the full balance.

The key advantage of a PPIA is this: if the IRS's 10-year collection statute expires while you are making partial payments, the remaining balance is forgiven. You never have to pay the portion of your debt that outlives the collection window.

                                                                Standard IA                                                          Partial Payment IA                      Monthly payment                         Pays full balance over time                           Based on ability to pay

Remaining balance                      Must be paid in full                                           May be forgiven at statute expiration

Financial disclosure                    Required for balances over $50K                Always required

IRS review                                        Less frequent                                                       Every 2 years

Difficulty to qualify                      Moderate                                                              Moderate — requires full disclosure 

You may qualify for a PPIA if:

• You can make some monthly payments, but not enough to pay the full balance before the collection statute expires
• You do not qualify for an Offer in Compromise due to assets or income level
• You have completed a full financial disclosure showing your actual ability to pay
• You are current on all tax return filings
• Your monthly disposable income — after IRS-allowed expenses — is less than what a standard installment agreement would require

The IRS uses your Collection Information Statement (Form 433-A or 433-F) to determine your monthly disposable income — the amount left over after subtracting your allowable monthly expenses from your gross monthly income. This disposable income figure becomes your monthly PPIA payment.

If your disposable income is $300 per month, your PPIA payment is $300 per month — even if your total debt is $50,000. The IRS accepts this because it is better than collecting nothing.

The IRS generally has 10 years from the date of assessment to collect a tax debt. If you are making PPIA payments and the 10-year window closes before your balance is paid off, the remaining balance is legally forgiven. This makes the PPIA especially powerful for:

• Older tax debts where the statute is closer to expiring
• Large balances that would take decades to pay off
• Taxpayers whose income is just above the CNC threshold

• Make every monthly payment on time
• File all future tax returns by their due dates
• Pay all future tax balances as they come due
• Respond promptly to IRS requests for updated financial information
• Notify the IRS of significant changes in your financial situation

 Unlike a standard installment agreement, the IRS reviews your financial situation every two years while you are on a PPIA. If your income has increased or your expenses have decreased, the IRS may increase your monthly payment. If your situation has worsened, your payment may be reduced or you may qualify for CNC status. Our tax preparation services are designed to help your business stay compliant and reduce your tax liabilities. We work with you to ensure that your taxes are filed accurately and in a timely manner.

A PPIA may be the right fit if:

• You have more debt than you could realistically repay in full
• You do not qualify for an OIC because you have assets or income above the RCP threshold
• There are several years remaining on the collection statute
• You can make consistent monthly payments — just not enough to pay the full balance

 A Partial Payment Installment Agreement requires careful financial analysis to set up correctly. The payment amount, timing, and statute expiration date all factor into how beneficial this option will be for you. As an IRS Enrolled Agent, I can model out your specific situation and determine whether a PPIA makes sense.