An Option If You Can’t Pay Your Taxes in Full
These agreements are payment plans that allow you to pay your debt over a period of time you agree upon with the IRS. In this situation, you must have some ability to pay your taxes but can’t pay in full within the remaining time the IRS has to collect. The IRS may allow you to make payments until this collection period expires.
Monthly payments must be made on time, tax forms must be filed on time, and estimated tax payments must be made. Unpaid taxes will be applied to future refunds until the tax balance is paid in full.
PPIA (Partial Payment Installment Agreement):
A partial payment installment agreement, often known as a PPIA, is an IRS settlement that allows you to pay less for your taxes by making monthly payments over a predetermined period of time. It’s an agreement between you and the Internal Revenue Service. Here’s what you need to know if you think a PPIA is right for you.
You will be required to make regular monthly payments to the IRS toward a portion of the taxes you owe over a period of time under a partial payment installment plan, but you will not be required to pay off your whole tax burden. From the time the tax return is filed, the IRS has only ten years to recover a tax amount. Any remaining balance at the end of the installment agreement’s term is forgiven.
A PPIA, like an Offer In Compromise, can result in significant tax savings. The PPIA works by arranging for you to pay the IRS monthly until the tax obligation is paid off. Taxpayers’ monthly payments vary depending on how much they owe and how much disposable money they have each month.
A PPIA is a very enticing resolution for taxpayers, but qualifying for one is quite tough. To be eligible, you must:
- You must owe the IRS at least $10,000 plus interest and penalties in addition to your original tax debt.
- have filed all needed tax returns
- have paid any estimated tax payments that were due
- You are unable to have an active OIC (Offer In Compromise).
- You are not permitted to file for bankruptcy.
The IRS will take into account all of your assets. If you have enough equity to satisfy your tax bill, they may not give you a PPIA. They may offer you to borrow against an item you own, such as your home, car, or productive land, to settle your tax due.
When determining if you qualify for a PPIA and what your monthly payment should be based on, the IRS will consider the following factors:
- Your financial capability
- Your current earnings
- You’re currently paying for all of your expenses.
- Your assets and the value of your assets.
When applying for a PPIA, the IRS may request documentation for the expenses you’re reporting, as well as current bank statements. They’ll look into practically every facet of your financial situation. They’re trying to figure out if you have more money than you claim. You or your enrolled agent might make a case for specific expenses while attempting to keep the monthly payment modest.
You don’t need to do it on your own.
Although the PPIA process isn’t particularly difficult, you should still seek advice from a tax professional with experience in dealing with tax debts, such as an enrolled agent. It’s critical that you understand all of your options based on your financial circumstances, and you may require assistance in negotiating the best monthly payment with the IRS.
You can have an enrolled agent contact the IRS on your behalf to request the PPIA. If the IRS requires additional information, they will contact you or your enrolled agent. They’ll tell you what they’re looking for and set you a deadline. If you miss a deadline, the specialist may reject your offer. After presenting the IRS with the needed information, you may need to defend your position, and a decision may take some time.
Every two years, the IRS might examine your PPIA to see if your financial condition has changed and you can afford a greater payment. If they determine that you are able to pay more, they might try to increase your monthly payment. You or your enrolled agent can contest this, but you may need to show proof that you are unable to make the higher monthly amount.
You can have an enrolled agent assist you in obtaining a PPIA if you believe it is the best option for you to pay off your tax debt. We negotiate with the IRS every day to try to get our customers the best possible tax resolution, and we can do the same for you.