The Partial Payment Installment Agreement (PPIA) is a tax relief program designed for individuals with very low disposable income and aren’t able to make the minimum payments or pay the full tax debt amount. It prevents the IRS from collecting your assets such as housing, vehicles, and so forth.
The IRS will continue to charge interest and penalties on your tax debt until it is paid in full. They also keep any tax return refunds to apply them to your tax debt. In the meantime, you are making steady manageable monthly payments to the IRS and bringing your debt down in the process. It’s similar to Offer in Compromise (OIC), but an OIC is significantly more difficult to qualify for than a PPIA.
When the IRS is reviewing your finances, they only take into account your bare minimum necessities – Transportation, housing, utilities, groceries, current taxes, and health insurance, etc.
Any expenses that are voluntary such as tuition or personal loans, or any unsecured debts you owe such as credit cards or medical bills are not accounted for.
A tax professional has extensive knowledge on how to apply for a PPIA and prove to the IRS you’re unable to pay your tax debt without financial hardship. Your chances of acceptance are significantly higher if you have a tax professional representing you.
Eligibility for a Partial Payment Installment Agreement
- Must be caught up on all tax returns
- Able to pay to the IRS, but not the full amount
- Owe a minimum of $10,000 including penalties and interest
- Not filed bankruptcy
- Offer in Compromise was rejected
- The sale of assets or loan on those assets would create a financial hardship
- Selling assets would not cover the debt
- Must have paid owed taxes from previous years
The eligibility requirements are quite intricate and if these conditions are not met, you may be rejected. You must also prove your eligibility every 2 years. Similar to Currently Not Collectible, you and your tax professional must submit the necessary papers to prove financial hardship every two years. It is highly recommended that you contact a tax professional before moving forward with a PPIA application.
Why A Short Term Payment Plan May Be Better For You
The Partial Payment Installment Agreement is one of the best tax relief programs available. Aside from Offer in Compromise, it is one of the only programs that actively reduce your debt.
The purpose of a PPIA is to make your payments until the Collection Statute Expiration Date (CSED). In other words, the IRS only has 10 years to collect your tax debt. If you’re making payments and the CSED arrives, the IRS is legally required to stop all collection attempts.
A PPIA is perfect for individuals who struggle with paying off their tax debt and have very little expendable income. It drastically reduces your debt to a manageable level and you control the monthly payments.
What to Keep in Mind when You Apply
Even though you’re making payments and collaborating with the IRS, the IRS will likely file a tax lien on your assets. A tax lien is a claim of interest on your property. You can read more about it in the link above, but it is important to understand that a lien hurts your credit and stops you from selling property, qualifying for a loan, getting a job, or renting a home.
We mentioned this earlier, but also note that you are obligated to prove financial hardship every 2 years to qualify for a PPIA. You must keep track of your finances at all times to make sure that what you pay the IRS each month is fair to you.
Receive a Free Consultation On Your Tax Liability
At America’s Choice Tax Relief, our tax professionals will ensure your eligibility for a Partial Payment Installment Agreement. We know that PPIA qualifications are lengthy and convoluted, but we make the process easy for you.
On average it takes the IRS between 3-4 months to process your PPIA, even with the help of a tax professional. America’s Choice Tax ensures your papers are filed efficiently and accurately to the IRS to speed up the process. Receive a free consultation today to check your eligibility for a Partial Payment Installment Agreement!