Tax Dictionary – Partial Pay Installment Agreement

IRS Definition

All taxpayers are expected to immediately full pay delinquent tax liabilities. When this is not possible, taxpayers may be allowed to pay their liabilities over a prescribed period of time. If full payment cannot be achieved by the Collection Statute Expiration Date (CSED), and taxpayers have some ability to pay, the IRS can enter into Partial Payment Installment Agreements (PPIAs).

More from H&R Block

If you can’t pay your full tax balance before the IRS runs out of time to legally collect it, you may be eligible for an IRS payment plan called a partial-pay installment agreement. To qualify for this type of agreement, you must provide the IRS with a financial statement listing all your assets (home, cars, bank accounts, etc.), income and expenses. The IRS will allow you only a certain dollar amount of expenses based on approved financial standards set by the IRS for each expense type (housing, car payment, etc).

If you have equity in one or more of your assets, the IRS may require you to sell or borrow against that equity to pay toward your tax bill before the IRS will set up a partial-pay installment agreement.

Note:  Under partial-pay installment agreements, the IRS reviews your financial situation every two years. If your ability to pay has increased, the IRS will expect you to increase your monthly payment.

Learn all the options you may have if you can’t pay your taxes.

Related Topics

Related Resources

IRS Letter 3172 – The IRS Filed a Notice of Federal Tax Lien Against You and You Have a Right to a Hearing

Learn more about letter 3172, why you received it, and how to handle an IRS notice of federal tax lien with help from the tax experts at H&R Block.

Tax Dictionary – CP2000 Notice

Get the facts from H&R Block about the CP2000 notice, which the IRS sends when your tax return doesn't match income information the IRS has on file.

Tax Dictionary – Required Minimum Distribution (RMD)

You could face a 50% penalty if you do not take the required minimum distribution from your IRA, 401(k) or 403(b) account. Get the facts from H&R Block.

Tax Dictionary – Reasonable Cause Penalty Relief

Get the facts from H&R Block about IRS penalty relief due to reasonable cause. Learn how the IRS will examine your reasons for failing to file or pay.