When a taxpayer owes money to the IRS, there are several options for a taxpayer to address the outstanding balance.
In many instances, it is not possible or feasible to pay the balance due all at once. As a result, an Installment Agreement may help.
Installment Agreements permit payment over time. Interest and penalties will continue to accrue on unpaid tax balances. As a result, this option is often best for taxpayers who have adequate income, but who cannot obtain a loan to pay the bill at once.
In some cases, taxpayers may be able to pay less than the full amount owed. A Partial Pay Installment Agreement (PPIA) allows taxpayers to pay only a portion of the total balance due. The circumstances under which the IRS will accept a PPIA include (but are not limited to):
- If a taxpayer has no assets or equity in assets; or has liquidated available assets to make a partial tax payment.
- Where a taxpayer does not sell or cannot borrow against assets with equity.
- Where it has been determined that enforcement is not appropriate.
- If full payment cannot be achieved by the Collection Statute Expiration Date (CSED), and taxpayers have some ability to pay.
Unlike a regular Installment Agreement, a PPIA is subject to IRS review every two years. As a result of this review, the amount of the installment payments could increase or the agreement could be terminated if the taxpayer’s financial condition improves.
We assist taxpayers seeking to address their outstanding liabilities by evaluating their financial information and negotiating a payment plan that the taxpayer can afford and the IRS will accept. Do not hesitate to contact us to discuss the feasibility of an Installment Agreement.
Interested in applying directly to the IRS? Learn more about IRS Online Installment Agreements.