What Are Partial Payment Installments?

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What Is a Partial Payment Installment Agreement?

Tax debt can feel overwhelming, but many options allow you to chip away at it little by little. One of the most appealing? The partial payment installment agreement (PPIA), which accounts for financial difficulties that would otherwise make it impossible to pay tax liabilities.

Not sure if this arrangement is right for you? Keep reading to learn what it involves and whether any pitfalls might make other options preferable.

How Partial Payment Installments Work

If approved, PPIAs allow taxpayers to make reduced monthly payments, which are applied to their total tax debt. These requirements cease when the debt is paid in full — or when the ability of the IRS to collect on the debt expires.

Because the IRS is only allowed to collect on most tax balances for ten years after the initial return is filed, PPIAs can produce significant savings in select situations.

Partial Payment Eligibility

The terms surrounding PPIAs are favorable, but these plans aren’t available to just anybody. The IRS imposes strict eligibility standards to ensure that only those with severe financial difficulties can qualify.

First, all required tax returns must be filed. From there, the IRS considers eligibility on a case-by-case basis, taking the following factors into account:

  • Your current income, including both traditional paychecks and self-employment or business income
  • The value of your assets, along with current equity

Keep in mind that you may need to substantiate financial information as you apply for partial payment installments. A tax expert can help you argue your case and keep your payments manageable.

Interested in pursuing partial payment installments with the IRS? Improve your odds of scoring an agreement with help from the experts at the Highland Tax Group. We know what it takes to get your partial payment agreement accepted, so reach out today to get started.