A Partial Payment Installment Agreement (PPIA) is a payment plan offered by the IRS that allows taxpayers to pay off a portion of their tax debt through monthly installments until the Collection Statute Expiration Date (CSED). Once the CSED is reached, the remaining tax debt is forgiven.
Here are some of the most commonly asked questions we’ve received about the PPIA:
1. How do I qualify for a PPIA?
To be eligible for a PPIA, you must:
- Demonstrate an inability to pay the full tax liability before the CSED.
- Provide a complete financial statement (Form 433-A, 433-B, or 433-F) with supporting documentation.
- File all required tax returns.
- Not be in an open bankruptcy proceeding.
- Agree to comply with all future tax obligations.
The IRS will assess your financial situation, including income, expenses, and asset equity, to determine eligibility.
2. How do I apply for a PPIA?
To apply, you must submit Form 9465 “Installment Agreement Request.” You’ll need to provide a detailed financial statement using Form 433-A (for individuals) or 433-B (for businesses), and any necessary supporting documents. It helps to have a tax professional look over your application to ensure accuracy.
3. What if my financial situation improves during the PPIA?
The IRS typically conducts reviews every two years to reassess your financial status. If your financial condition improves, the IRS may adjust your monthly payment amount or terminate the agreement, requiring full payment of the remaining tax debt.
4. Can the IRS still file a federal tax lien if I have a PPIA?
Yes, the IRS may file a Notice of Federal Tax Lien to protect its interests until your tax debt is fully satisfied, even if you are in a PPIA.
5. Are there penalties for defaulting on a PPIA?
If you miss payments, fail to file future tax returns on time, or do not pay new tax liabilities, you are considered defaulted on your PPIA. In such cases, the IRS may terminate the agreement and initiate enforced collection actions, such as levies or garnishments.
6. Does the IRS have alternatives to the PPIA?
Yes, the IRS has several programs for paying off your tax debt. The most common are:
- Offer in Compromise (OIC)
- Currently Not Collectible (CNC) Status
- Regular Installment Agreement
Consult with a Tax Professional
The best way to know if the PPIA is the right option is to seek guidance from a tax professional like the team at Highland Tax Group. We can review your financial situation to let you know your options and help prepare your PPIA application if it’s the right choice. Contact Highland Tax Group so we can start discussing your tax situation today.