What is a Partial Payment Installment Agreement?

A PPIA is an IRS installment agreement where your monthly payment is based on your ability to pay — not the amount needed to pay the full balance. If the CSED (10-year collection statute) expires while you are paying, the remaining balance is forgiven.

How is a PPIA different from a regular installment agreement?

A standard installment agreement requires payments large enough to pay the full debt within the remaining CSED period. A PPIA allows payments based purely on your disposable income — even if those payments will leave a balance when the CSED expires.

Does the IRS review my finances during a PPIA?

Yes. The IRS reviews your PPIA every two years. If your financial situation improves, the IRS will increase your monthly payment. If it does not improve, the agreement continues at the same amount.

Partial Payment Installment Agreement (PPIA): Pay Less Than Your Full IRS Balance

A Partial Payment Installment Agreement (PPIA) is a payment plan where you pay the IRS what you can actually afford — not what it would take to pay the full balance. If the IRS’s 10-year collection statute (the CSED) expires while you are making payments under a PPIA, the remaining debt is legally extinguished.

The PPIA sits between two more well-known programs: the standard installment agreement (you pay everything over time) and the Offer in Compromise (you pay a lump-sum settlement). For taxpayers who can afford consistent monthly payments but cannot realistically pay the full balance — and whose CSED has meaningful time remaining — the PPIA can be an effective middle path.

How a PPIA Works

The IRS calculates your monthly payment based on your disposable income: what is left after you subtract your allowable living expenses (based on IRS national and local standards) from your net monthly income. This is the same calculation used in an Offer in Compromise, but instead of a lump-sum settlement, the result determines a monthly payment.

If your disposable income is $300/month but your balance is $80,000 — and there are 6 years left on the CSED — you would pay $300/month (roughly $21,600 total) and the remaining ~$58,400 would expire with the statute.

The IRS reviews your financial situation every two years. If your income increases or expenses decrease, your payment will go up. The IRS can also request updated financials if it has reason to believe your situation has changed.

PPIA vs. Offer in Compromise

	PPIA	OIC
Payment type	Monthly installments	Lump sum or short-term payments
Remaining balance	Expires with CSED	Forgiven upon acceptance
Financial disclosure	Full (Form 433-A or 433-F)	Full (Form 433-A or 433-F)
IRS review	Every 2 years	No review after acceptance
Liens	IRS may maintain liens during PPIA	Lien released after OIC paid in full
Best for	Steady low income, CSED > 3 years	Low assets, can make a lump sum

PPIA vs. Currently Not Collectible

If you have no disposable income at all — your allowable expenses exceed your income — you may qualify for Currently Not Collectible (CNC) status, which pauses collection entirely without any payment. A PPIA requires some disposable income; CNC requires none.

How to Apply

There is no separate PPIA application form. You request a PPIA by contacting the IRS (or having a tax professional do so) and submitting:

Form 433-A (OIS) — Collection Information Statement for Wage Earners and Self-Employed Individuals, or
Form 433-F — the shorter version used for simpler financial situations

The IRS evaluates your financials against its National Standards and Local Standards for housing, food, transportation, and healthcare. Assets are also considered — the IRS may require you to liquidate non-essential assets (second car, investment accounts) before approving a PPIA.

Key Limitations

Liens remain. The IRS typically maintains its federal tax lien while a PPIA is active, since you are not paying the full balance.
Payments are reviewed. Unlike an accepted OIC, your payment is not locked in. Improved finances mean higher payments.
CSED tolling. Requesting and maintaining a PPIA can toll the CSED in some circumstances — get a precise CSED calculation before proceeding.
Compliance required. You must remain in full tax compliance (file all returns on time, pay current taxes) throughout the PPIA. One missed filing can default the agreement.

Sources

Still have questions about Partial Payment Installment Agreement (PPIA): Pay Less Than Your Full IRS Balance?

Every IRS situation is different. Get your specific case reviewed by a licensed tax professional — no obligation, no cost to talk.

Talk to a licensed tax pro — free

Connected within one business day. Licensed professionals only.

Get your personalized summary emailed to you

No spam. Unsubscribe anytime.

Disclosure: TaxClear may receive compensation when you are connected with a tax professional through our referral program. This does not affect our recommendations or the information we provide. Learn how we make money.