Partial Payment Installment Agreement
Pay Less Than Your Full Balance — Legally
The Partial Payment Installment Agreement (PPIA) is a powerful but underused resolution strategy. Unlike a standard installment agreement where you pay the full balance plus interest, a PPIA allows you to make monthly payments based strictly on what you can actually afford — even if those payments will never cover your full debt. When the IRS's 10-year collection statute expires, the remaining balance is legally uncollectable. This makes a PPIA potentially far more valuable than it first appears.
What Is a Partial Payment Installment Agreement?
A Partial Payment Installment Agreement (PPIA) is authorized under Internal Revenue Code Section 6159(e). It is similar to a standard installment agreement but with one critical difference: the monthly payment is set based on the taxpayer's disposable income after allowable living expenses — not the amount needed to fully pay the debt within the collection statute. This means if your disposable income is lower than the amount needed to pay off your full debt before the 10-year collection statute expires, the remaining balance could be legally extinguished when the statute runs. The IRS requires a full financial disclosure for PPIAs and reviews them every two years. A federal tax lien is typically filed as part of the agreement, and the IRS may require you to liquidate some non-essential assets.
How It Works
Collection Statute Analysis
We calculate exactly when each year of tax debt's 10-year collection statute expires. This determines the total amount you would need to pay to outlast the statute.
Disposable Income Calculation
Using IRS National and Local Standards, we calculate your true disposable income — the maximum monthly payment the IRS can require under a PPIA.
Financial Disclosure Preparation
We prepare Form 433-A or 433-B with full supporting documentation, presenting your financial picture in a way that supports the lowest possible monthly payment.
PPIA Negotiation & Submission
We negotiate the PPIA terms with the IRS, addressing any objections regarding your expenses, assets, or proposed payment amount.
Statute Monitoring
We track all collection statute expiration dates throughout the PPIA period and advise you on any events that could extend the statute (bankruptcy, OIC, etc.).
Who Should Consider This?
- ✓Taxpayers whose disposable income is insufficient to fully pay their balance within the collection statute
- ✓Individuals with large IRS debts (typically $50,000+) that cannot be fully paid on any reasonable timeline
- ✓Taxpayers who do not qualify for an OIC but still cannot afford full repayment
- ✓Taxpayers with stable but limited income who want certainty about their maximum payment obligation
- ✓Anyone where the IRS collection statute will expire before the full debt could be paid
- ✓Taxpayers with limited assets and income who want a legal path to eventual debt extinction
Key Benefits
Pay Less Overall
Your payments may never cover the full balance — and when the statute expires, the remainder is gone.
Payments You Can Afford
Monthly payments are based strictly on your actual financial situation, not the balance owed.
Statute Works For You
Unlike an OIC where the balance is paid now, a PPIA lets the statute of limitations do the heavy lifting over time.
Reviewable Terms
The IRS reviews PPIAs every 2 years. If your financial situation has not improved, the terms remain the same.
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Frequently Asked Questions
How is a PPIA different from an Offer in Compromise?+
An OIC settles the full debt immediately for a lump sum (or short-term payments). A PPIA involves ongoing monthly payments over time, with any remaining balance potentially expiring with the statute. An OIC typically results in lower total payments for those who qualify, but many taxpayers who cannot qualify for an OIC can benefit significantly from a PPIA.
Will the IRS file a lien if I enter a PPIA?+
Generally yes — the IRS files a Notice of Federal Tax Lien as part of establishing a PPIA. We work to ensure the lien is structured in a way that minimizes impact on your ability to buy, sell, or refinance property.
What happens if my income increases during the PPIA?+
The IRS reviews PPIAs every 2 years and can require updated financial information. If your income increases, your monthly payment may increase. This is why monitoring your financial situation and the statute dates is critical.
Can the collection statute be extended?+
Yes. Filing for bankruptcy, submitting an OIC, requesting a Collection Due Process hearing, or the IRS agreeing to extend it all pause and extend the 10-year statute. We carefully evaluate all decisions to avoid inadvertently extending your statute.
Related Services
Offer in Compromise
A government-approved program that lets qualifying taxpayers settle their IRS debt for a fraction of the full amount.
Installment Agreement
Establish a formal monthly payment plan with the IRS to satisfy your tax debt over time and stop collection actions.
Currently Not Collectible
If your income barely covers your basic living expenses, the IRS is required by law to suspend collection activity on your account.