The IRS has offered varying options to taxpayers who cannot pay their complete taxes. They have set up a partial payment installment agreement called the PPIA to sort such issues. To request a PPIA is more accessible and less tedious than asking for a compromise offer, but it also needs some attention to details. You have to know the rules for a PPIA request.
How the PPIA agreement works
The Partial Payment Installment Agreement is akin to a contract between you and the IRS. You will be required to make consistent monthly disbursements to the IRS over a specified time. However, you don’t have to pay off the entire tax debt.
All balances leftover at the end of the payment term as stipulated in the installment agreement will be forgiven. But please note that the repayment phase for a PPIA may be longer than the other IRS installment options, so please think carefully about your options before making a final choice.
There are some obligations you must fulfill before you can fill for this installment payment:
You must fill all tax returns before the IRS can confirm the partial payment installment agreement.
It would help if you were current with your income tax withholding or projected tax payments.
All back taxes you previously owed must be paid before requesting a partial payment installment agreement for a current amount.
You must have filed all future returns at the right time and pay all due taxes on the returns.
The IRS is going to file a Notice of Lien against you for the money you owe. This gives them the option of collecting from you if you default on your terms of the agreement.
The IRS also has the mandate to re-evaluate the amount of money you pay monthly every two years.
How to determine if you qualify for PPIA
There are some rules to adhere to for the qualification of PPIA:
Firstly, you must owe the IRS a minimum of $10,000 to be eligible for this plan. The figure includes all penalties and interests with your first tax debt.
You shouldn’t be bankrupt when applying for it, and you shouldn’t have an offer in compromise granted by the IRS.
All assets you own will play a crucial role in determining if you are approved. You cannot liquidate those assets for any reason, and their equity must be sufficient to cover the debt “If” you need to liquidate them. The equity should be enough should you need to borrow money and use it as collateral.
Please don’t go through the process alone.
The Partial Payment Installment Agreement is easy to apply for, but it can also be challenging. Hence why you may have to get a tax professional who has been handling tax debts. You must understand your options, and if you need help negotiating the best monthly payment, the expert will advise you.
Know how much you owe
Now is also the right time to precisely know what you owe in unpaid taxes before going to the IRS. You can reach the IRS to secure copies of all your tax returns or the online transcript that verifies the amount, so be prepared. The total amount will only include the original tax due with all accrued interests and penalties as unpaid balances.
When you are set, you can write a letter to the IRS with your request for PPIA and submit the proposal with Forms 9465 and 433-A. Send these documents to the IRS revenue officer dealing with your case, to the Automated Collection System Unit or a nearby IRS Service Center.
Expect a reply from the IRS within 30 days, and they might request additional information about your assets which may be liquidated to pay off your tax debt. Make all payments every month if your request is approved, and you can pay with a credit card or withdrawal from a checking account.
Now you can relax if you have been struggling with paying your taxes: get a PPIA and let the IRS take care of the rest.
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