All IRS Back Tax Help comments are in blue. This post is about the IRS Partial Payment Installment Agreement. It is one of three solutions if you owe 1040 back taxes, and one of four solutions if you owe 941 payroll back taxes.
If you know you need to take action, read my thread about whether or not you should hire someone (You should not automatically.) titled “Owe the IRS Back Taxes? When, Who, and How to Hire IRS Back Tax Help”
As usual, If you like the tone of these posts, contact me for consultation. I can be reached at irsbacktaxhelp@gmail.com. Before you email me, please click on and read “About IRS BACK TAX HELP”.
Here is the irs.gov link and full text:
Legislation Allows Partial Payment Option
http://www.irs.gov/businesses/small/article/0,,id=136207,00.html
“The IRS implemented an additional payment option, on January 17, 2005, known as the Partial Payment Installment Agreement (PPIA) for taxpayers who have outstanding federal tax liabilities…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.” This has been a great tool for solving back tax problems! Much more so than the Offer in Compromise has been lately.
What is an IRS Partial Payment Installment Agreement?
The IRS Partial Payment Installment Agreement is very different from the standard IRS Installment Agreement. Instead of paying off the full tax liability in five years or less, you have up through the full length of the Collection Statute Expiration Date (CSED) to pay the overdue taxes which may be up to ten years. This is helpful for one of two reasons:
1. It reduces the strain on cash flow.
2. In many cases, as the name implies, it’s a partial payment of the past due tax problem, not a full payment of the taxes, penalty, and interest owed. Once the monthly amount is agreed upon that is all you have to pay until the statute runs out. If there is any tax liability when the statute expires, the IRS forfeits their right to collect the remaining amount.
“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.” Even though it says “will be” it’s up to the IRS to elect to review or not. We have not been seeing those reviews with any regularity. It is a possibility.
If you think this is worth pursuing and you owe IRS back taxes, contact me so you can put this tax problem behind you for good.