Partial Payment Installment Agreement

How a partial payment installment agreement works

Section 6159(a) of the tax code lets the IRS enter into an installment agreement for the “full or partial collection” of a tax liability. A PPIA is the partial version. You pay a fixed monthly amount that matches what you can afford after allowable living expenses, and you keep paying until the collection statute on each tax year runs out. The IRS explains the option on its payment plans page and in Tax Topic 202; the internal rules are in IRM 5.14.2.

Three things set it apart from the other IRS payment plans:

• It does not have to pay the balance in full. A Simple Payment Plan (formerly the streamlined installment agreement) must pay what you owe by the CSED (IRS.gov, July 2026). A PPIA is the only installment agreement designed to stop short of that.
• It needs full financial disclosure. You must complete a Collection Information Statement and give supporting documents, and the IRS decides whether to file a Notice of Federal Tax Lien.
• It is reviewed. Section 6159(d) requires the IRS to review a partial payment agreement at least once every two years.

Each tax year has its own CSED, usually 10 years from the date that year’s tax was assessed. As the oldest years expire, the remaining balance shrinks. The IRS manual says that when a two-year review shows no significant change in your ability to pay, the payment stays the same until the statute expires.

Example (assumed figures): you owe $78,000 across three tax years, the latest CSED is six years away, and after allowable expenses you have $400 a month left. Over those six years you would pay about $28,800 (72 payments of $400). Interest at the federal short-term rate plus 3 percentage points (currently 7% (IRS.gov, Jul-Dec 2026)) keeps running, so the balance falls slowly or not at all. If nothing changes at the reviews, the rest becomes uncollectible when each year’s CSED passes. That result is not guaranteed: a raise, an inheritance or a new asset can change the payment at the next review.

How a PPIA differs from an offer in compromise

Both options can end with you paying less than the full balance, and both use the same financial analysis. They are built very differently, though. An offer in compromise settles the balance now for an agreed amount. A PPIA leaves the full balance on the books and lets the collection statute do the rest.

A PPIA often makes more sense than an offer when only a few years remain on the collection statute, because the IRS can only collect for that remaining time anyway. An offer often makes more sense when many years remain and you can raise a lump sum close to your reasonable collection potential. The IRS says that if it finds you can pay in full, it will point you to an installment agreement rather than accept an offer. Before paying anyone to file an offer, run your numbers through the free IRS Offer in Compromise Pre-Qualifier.

Financial disclosure and allowable expenses

IRS.gov says that if your proposed payment will not pay the balance by the CSED, you must complete a Collection Information Statement and give supporting financial information. For individuals that is usually Form 433-F or Form 433-A; businesses use Form 433-B. When a revenue officer handles the case, the IRS manual calls for a full Form 433-A or 433-B.

The IRS compares your expenses with its Collection Financial Standards. The current version took effect on 29 June 2026.

• National standards for food, housekeeping supplies, clothing, personal care and miscellaneous items are allowed in full for your family size, without proof of what you actually spend.
• Out-of-pocket health care is allowed per person, on top of what you pay for health insurance.
• Local standards for housing and utilities and for transportation vary by county and region. You usually get the lower of what you actually spend or the standard.
• Other necessary expenses, such as current-year taxes, court-ordered payments and child care, are considered separately if you can document them.

If the standards are too low to cover your basic living expenses, the IRS may allow your actual costs when you document them. Income minus allowable expenses is the amount the IRS expects you to pay each month.

Before you apply, gather pay stubs or profit-and-loss statements, recent bank statements, housing and loan statements, insurance and medical bills, and retirement and investment account statements.

Equity in assets: sell, borrow or explain

The IRS will not grant a PPIA while you have equity it could reasonably collect. IRM 5.14.2.2 says equity in assets “must be addressed and, if appropriate, be used to make payment,” although using all of it is not always required. In practice that means one of three outcomes:

1. Use the equity. If borrowing against or selling an asset is realistic, you will normally be asked to make a good-faith attempt and send copies of your loan applications and the lender’s replies.
2. Show that you can’t. A PPIA can be granted when the equity is small, when no lender will lend against it, or when you have already sold what you could and paid the proceeds.
3. Show that it would cause hardship. A PPIA can also be granted when selling or borrowing would leave you unable to pay reasonable basic living expenses. The IRS manual gives the example of a retiree on Social Security whose only asset is a home with some equity, where a forced sale would leave no suitable place to live.

The two-year review, waivers and default

Every PPIA gets a financial review at least every two years. The IRS may ask for a new Collection Information Statement and documents. Depending on what has changed, your payment can go down, go up or stay the same. A big raise or a new asset can turn a PPIA into a full-pay plan.

Can the IRS ask you to extend the statute?

Only in narrow cases. Under current IRS policy, a statute extension (Form 900, Tax Collection Waiver) is used only with some partial payment agreements. The typical case is an asset you will receive after the CSED, such as a trust distribution, when waiting for it is the best way to collect. The extension can be no longer than five years plus one year for administrative actions. It can only be signed when the PPIA starts, not at a later review. You don’t need a waiver just because your payments continue up to the CSED.

Keeping the plan in good standing

A PPIA follows the same default rules as other installment agreements. File every return on time, pay new taxes in full, and make each payment on its due date. The IRS applies any refund to the balance, and that does not replace your monthly payment. Before ending the plan, it usually sends a CP523 notice of intent to terminate. Direct debit lowers the setup fee to $29 online and makes a missed payment less likely.

How the collection statute shapes a PPIA

The whole value of a PPIA depends on the CSED, so check yours on your account transcript before you apply. Our guide to the 10-year collection statute shows how to read it. A few rules matter most here:

• The clock pauses while your request is pending. It also pauses for 30 days after a rejection, and for as long as an appeal of a rejection or termination takes.
• The clock runs while the PPIA is in effect. IRS.gov says the collection period is not suspended during an installment agreement.
• Each year expires on its own date. Older years drop off first, so your total balance can fall sharply in the last years of the plan.
• Other events can add time. Examples are a later offer in compromise, a bankruptcy filing or a Collection Due Process hearing.

When a CSED passes, the IRS can no longer collect that year’s balance. It must release a filed lien within 30 days once the liability has become legally unenforceable (IRC 6325(a)).

Is a partial payment installment agreement right for you?

How to request a PPIA

1. File every required return. The IRS won’t consider a payment plan until you are current on filing and on this year’s payments.
2. Pull your account transcripts. Note the balance and CSED for each year.
3. Complete a Collection Information Statement. Use Form 433-F or 433-A (433-B for a business) and attach the supporting documents.
4. Make the request. If you try the Online Payment Agreement and can’t meet its minimum payment, the tool sends you to Form 9465 with Form 433-F, or the combined Form 433-H. You can also call 800-829-1040 (IRS.gov, 2026) (businesses 800-829-4933 (IRS.gov, 2026)) or the number on your notice, or work with an assigned revenue officer.
5. Answer the equity questions and sign up for direct debit. Keep copies of everything you send.

You can do this yourself. Help is most useful when the numbers are tight, a revenue officer is involved, or the IRS is pressing you to sell or borrow against a home or business asset. Free help exists too: the Taxpayer Advocate Service (877-777-4778 (IRS.gov, 2026)) and Low Income Taxpayer Clinics.

Frequently asked questions

Keep reading in the Fresh Start hub

• IRS payment plans comparedShort-term, Simple, non-simple and partial payment plans side by side.
• Offer in compromiseHow the IRS calculates reasonable collection potential.
• Form 433-AThe detailed financial statement for a PPIA or an offer.
• The 10-year collection statuteFind your CSED and what pauses it.
• Currently not collectible statusWhen you can't pay anything at all right now.
• Compare every optionPayment plan vs offer vs CNC in one table.