Installment Agreements

If you’re not financially able to pay your tax debt immediately, you may be eligible to make monthly payments through an IRS Installment Agreement or Partial Payment Installment Agreement (PPIA).

Generally, the IRS will not take enforcement collection actions such as levies & seizures:

  • When an installment agreement is being considered;
  • While an agreement is in effect;
  • For 30 days after a request is rejected, or
  • During the period the IRS evaluates an appeal of a rejected or terminated agreement.

Before you may apply for an installment arrangement, you must:

  • File all required tax returns
  • Determine the largest monthly payment you can make ($25 minimum);
  • Understand that your future refunds will be applied to your tax debt until it is paid in full; and
  • Understand that penalties and interest will continue to accrue until your balance is paid in full.

There are fees for setting up an Installment Agreement that range from less than $50 to more than $100.

You can apply for an Installment Agreement online if you owe $50,000 or less in combined individual income tax, penalties and interest. If you owe more than $50,000, you must complete and mail Form 9465, Installment Agreement Request (attach PDF) and Form 433-F, Collection Information Statement (attach PDF). You may also file Form 9465 directly with your tax return.

Partial Payment Installment Agreement (PPIA)

The IRS implemented an additional payment option in 2005, known as the Partial Payment Installment Agreement (PPIA), for taxpayers who have outstanding federal tax liabilities. This new payment option became possible with the passage of the American Jobs Creation Act of 2004. The new legislation includes language amending Internal Revenue Code 6159 to allow the IRS to enter into installment agreements that result in full or partial payment of the tax liability.

Prior to enactment of this legislation, taxpayers who could not fully pay their outstanding tax liabilities could only enter into an agreement with the IRS if it resulted in full payment of the liability.

Taxpayers who are being considered for a PPIA must provide complete and accurate financial information, on Form 433-A for individuals and Form 433-B for businesses, that will be reviewed and verified. Taxpayers will also be required to address equity in assets that can be utilized to reduce or fully pay the amount of the outstanding liability.

In addition, taxpayers granted PPIAs will be subject to a subsequent financial review every two years. As a result of this review, the amount of the installment payments could increase or the agreement could be terminated, if the taxpayer’s financial condition improves.

The PPIA payment option may provide an appropriate payment option to resolving your outstanding taxes.

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