Most IRS installment agreements are set up so that the payments will satisfy the total amount due before the Collection Statute Expiration Date (CSED), affording minimal tax relief to the cash-strapped taxpayer. However, in some situations this is not possible. Sometimes the taxpayer’s financial situation is such that the debt will not be satisfied before the CSED, even if minimum monthly payments are consistently made. This is called a Partial Payment Installment Agreement (PPIA).

For instance, suppose the taxpayer owes $10,000 for tax year 2001 and the financial statement reveals that the highest payment that can be made is $100 per month. If the 2001 liability expires in 36 months, then taxpayer will pay only $3,600 over the life of the statute. Obviously the IRS does not like to enter into these types of arrangements unless absolutely necessary. Here are some of the PPIA prerequisites:

• All back tax returns filed
• No equity in assets (or assets liquidated and paid to the IRS prior to PPIA approval)
• Full Collection Information Statement (IRM 5.14.2)