A Partial Payment Installment Agreement (PPIA) is a payment plan offered by the IRS that allows taxpayers to make monthly payments on their tax debt, typically resulting in paying less than the full balance owed. Unlike a standard Installment Agreement, which requires full repayment of the debt, a PPIA is designed for taxpayers who cannot afford to pay the full amount due to financial hardship.
To qualify for a PPIA, taxpayers must submit Form 433-A or Form 433-B, providing detailed financial information about their income, expenses, and assets. The IRS uses this information to determine the taxpayer’s ability to pay and calculates a monthly payment based on the taxpayer’s financial situation.
The PPIA may result in the taxpayer paying less than the full amount of the debt, as the agreement continues until the Collection Statute Expiration Date (CSED) is reached. After the CSED, any remaining debt is forgiven. However, interest and penalties continue to accrue during the installment period.
Taxpayers who enter into a PPIA must stay current on their future tax obligations and may need to provide updated financial information periodically to maintain the agreement.