If you owe back taxes to the Internal Revenue Service (IRS), you may be eligible for a partial payment installment agreement. This type of agreement allows you to pay back your tax debt in smaller, more manageable payments over a longer period of time.
What is a Partial Payment Installment Agreement?
A partial payment installment agreement (PPIA) is a type of installment agreement that allows taxpayers to pay off their tax debt in smaller amounts over a longer period of time. Unlike a traditional installment agreement, which requires the full payment of the balance owed, a PPIA allows taxpayers to pay back a portion of their tax debt.
How Does a PPIA Work?
A PPIA is a negotiated agreement between the taxpayer and the IRS. The amount of the monthly payment is based on the taxpayer’s ability to pay and the total amount owed. The IRS will review the taxpayer’s financial situation, including income and expenses, assets, and liabilities, to determine the amount of the monthly payment.
Under a PPIA, the taxpayer will make payments for a set period of time, usually between 3-5 years. The total amount paid during that time will be less than the total tax debt owed. The balance that is not paid will be forgiven.
Who is Eligible for a PPIA?
Not everyone is eligible for a PPIA. In order to qualify, taxpayers must meet certain criteria, including:
1. Owning $10,000 or more in tax debt, including penalties and interest
2. Demonstrating a financial hardship that prevents them from paying the full amount owed
3. Being current on all tax filings
4. Not having any open bankruptcy proceedings
5. Providing the IRS with a full financial disclosure, including income, assets, and expenses
How to Apply for a PPIA
To apply for a PPIA, taxpayers must complete Form 9465-FS, Installment Agreement Request, and Form 433-A, Collection Information Statement. These forms will provide the IRS with the information needed to determine whether the taxpayer is eligible for a PPIA and the amount of the monthly payment.
Taxpayers can also apply for a PPIA online using the Online Payment Agreement Application on the IRS website.
Benefits of a PPIA
There are several benefits to a PPIA, including:
1. Lower Monthly Payments: A PPIA allows taxpayers to make smaller monthly payments, which can be more manageable than paying the full amount owed.
2. Avoiding Liens and Levies: A PPIA can help taxpayers avoid liens and levies, which can be damaging to their credit score and financial stability.
3. Forgiveness of Unpaid Balance: Any unpaid balance at the end of the PPIA period will be forgiven, allowing taxpayers to move on from their tax debt.
Conclusion
If you owe back taxes to the IRS, a partial payment installment agreement may be the solution you need to manage your tax debt. This type of agreement allows you to make smaller, more manageable payments over a longer period of time. To determine whether a PPIA is right for you, consult with a tax professional or contact the IRS directly.
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