A Partial Payment Installment Agreement (PPIA) was created by the IRS in 2005 to provide taxpayers another option when resolving their tax debt. A PPIA can only be utilized by taxpayers who cannot afford to pay their entire amount of tax debt.
A major benefit of using Partial Payment Installment Agreement is that it allows a reduction in tax debt, so that taxpayers who do not have the capability to pay the entire tax debt can resolve their case. Before qualifying a taxpayer for a PPIA, the IRS reviews and verifies the financial information provided by the taxpayer. The IRS also considers equity in assets to judge if it can be used to fulfil the tax debt fully or partially.
A Partial Payment Installment Agreement helps taxpayers stay protected from the IRS collection actions such as federal tax lien and levy. A lien damages a taxpayer’s ability to take credit, and risks the sale of the property and/or asset on which the lien has been placed. Before the IRS places a lien, taxpayers with an inability to pay the entire tax debt can explore a PPIA to successfully resolve their tax debt case.
Under a PPIA, taxpayers only pay in monthly installments what they can afford. The IRS cannot force a taxpayer to pay tax debt amounts if it impairs their ability to meet essential living expenses. This payment plan, therefore, allows payment of the tax debt in monthly installments that taxpayers can afford to pay without disturbing their essential living expenditures.
With a Partial Payment Installment Agreement, taxpayers get a longer duration to pay their tax debt. The duration of time for the payment of tax debt depends on the financial strength of taxpayers applying for the plan.
A Partial Payment Installment Agreement opens up tax debt resolution to those taxpayers that have limited financial capability to pay their tax debt in full. It allows tax debt reduction, longer payment time, payment in installments, and freedom from IRS collection actions.