The IRS won't approve a partial payment installment agreement (PPIA) for every taxpayer. You generally have to meet certain eligibility criteria. The Internal Revenue Manual has a detailed explanation of the requirements for a PPIA. We summarized it here for you.
PPIA General Requirements
You must complete Form 433-A (for individuals or self-employed) or Form 433-B (for businesses) to show your current financial situation, including income, expenses, and assets. You also must agree to pay the maximum amount you can afford based on your ability to pay.
IRS Verification and Documentation
Income and assets are verified using financial records, tax returns, and other IRS tools. If the IRS finds any discrepancies, they'll have to be resolved before the PPIA can be approved. If you have significant assets or equity, the IRS might ask you to sell or borrow against these assets to help reduce your tax debt.
The documents the IRS might require are:
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Real property records
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Vehicle and personal property records
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Financial records and credit reports for accounts with higher balances
For businesses, income and expenses must be verified using bank statements, and business assets must be reviewed to determine potential equity.
Getting Approved for the PPIA: Specific Situations
Every taxpayer's situation is different, and the IRS tries to account for possible scenarios that you could be in:
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No Assets/No Equity: A PPIA can still be approved if you have no assets or equity or have liquidated assets to make a partial payment.
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Limited Equity: You may qualify if equity in assets is too low to secure a loan or if selling the asset would cause economic hardship or disrupt income generation.
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Necessary Expenses: Only necessary expenses (e.g., living expenses, income-generating costs) are allowed in the agreement. Unnecessary expenses must be adjusted.
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Defaulted on Previous IRS Agreements: If you've defaulted on previous installment agreements within the last 24 months, you may still qualify. You must make payments via direct debit or payroll deduction unless special circumstances apply.
Increase Your Chances of PPIA Approval with a Tax Attorney
By meeting these requirements and providing the necessary documentation, you can demonstrate your eligibility for a PPIA and work toward resolving your tax debt in a manageable way. A reliable tax attorney can help you gather the documents you need and send your request to the IRS. With help from Gabaie & Associates, LLC, you may have a better chance of getting approved for your PPIA. Call us today at (410) 358-1500 or reach out via our contact form to schedule a free consultation.
