Partial Payment Installment Agreement Example: $19,072 IRS Debt Set At $100 A Month
In this case, a wage earner who had not had enough federal tax withheld for two years owed the IRS $19,072.42, not the $15,000 she expected, and her wages were being garnished. After reviewing her finances, a tax professional set up a Partial Payment Installment Agreement (PPIA) of $100 a month, much less than the payment plan she could not keep up with. Under a PPIA, the IRS accepts monthly payments that will not pay the full balance before the collection statute expires, usually 10 years after assessment. Results depend on each taxpayer's finances.
The Case At A Glance
| Detail | This case |
|---|---|
| Problem | Not enough federal tax withheld from her paycheck for two years; wages garnished |
| Balance she expected | $15,000 |
| Actual balance found in IRS transcripts | $19,072.42 |
| Earlier attempt | A payment plan she set up herself, which was too high to keep |
| Result | Partial Payment Installment Agreement of $100 per month until the collection statute expires |
| Missing returns | None |
What Is A Partial Payment Installment Agreement?
A Partial Payment Installment Agreement is an IRS payment plan where the monthly amount is based on what you can actually afford, even if those payments will not pay off the full balance before the IRS's time to collect runs out. That deadline, the Collection Statute Expiration Date (CSED), is generally 10 years from when the tax was assessed. Whatever is still unpaid when the CSED passes generally can no longer be collected.
- The IRS requires full financial disclosure, usually on Form 433-A or 433-F, with proof of income and expenses
- Monthly payments are set from your disposable income using IRS allowable expense standards
- The IRS can review your finances again, typically about every two years, and raise the payment if your income goes up
- Penalties and interest keep accruing while the plan is in place
- You must file all required returns and stay current on new taxes
- The IRS may file a federal tax lien
How This Case Was Resolved
- Power of attorney. The client signed IRS Form 2848 so a tax professional could speak with the IRS for her.
- Collection hold. The tax professional asked the IRS for a hold on enforcement while the case was reviewed.
- Transcripts and records. IRS account transcripts were pulled, showing the true balance of $19,072.42. Bank statements and IRS letters were reviewed.
- Financial analysis. Her income and allowable expenses were organized on IRS collection forms.
- Agreement. The tax professional requested a PPIA, and the IRS set payments at $100 a month.
Who Qualifies For A PPIA
A PPIA generally fits when you cannot afford to pay the full balance, even over the remaining collection period, but you do have some monthly disposable income. If you can pay in full within the limits of a regular installment agreement (including the streamlined plan for balances up to $50,000), the IRS will usually require that instead. If you have no ability to pay at all, Currently Not Collectible status may apply, and if your assets and future income are limited, an Offer in Compromise may be worth checking.
PPIA Vs. Other IRS Options
| Option | What you pay | Best for |
|---|---|---|
| Full-pay or streamlined installment agreement | The full balance over time | Balances you can pay in full, up to about $50,000 for streamlined |
| Partial Payment Installment Agreement | What you can afford monthly until the CSED | Some income, but not enough to pay in full |
| Offer in Compromise | A one-time or short-term reduced amount | Very limited income and assets |
| Currently Not Collectible | Nothing for now | No ability to pay basic living expenses plus tax |
More examples: IRS tax problems and solutions and tax debt relief options.