What is a partial payment installment agreement?

IRS agrees to allow you to pay only a portion of your debt over the allotted amount of time the IRS gives you. In this situation, you are paying an amount less than the original tax debt amount.

What is the difference between an installment agreement and a partial payment installment agreement?

An installment agreement is expected to pay off the outstanding tax debt obligation, the Partial Payment Installment Agreement however expected to be paying off LESS than the originally owed amount. When what you can afford to pay in a monthly installment is less than the monthly amount required to pay off your entire debt over the remaining periods and before you reach your statute of limitation.

One of the biggest factors is your financial situation, including your income, cash on hand and other assets you own. If your financial situation does not allow you to make full payment, but you are still able to make some level of payment towards your debt, a partial payment installment agreement can possibly be the right strategy for you. When you contact us, we will be able to assess if your agreement will likely be accepted or not, or if other strategies are more suited to your situation.

What is Trust Fund Penalty?

A Trust Fund in terms of employment tax should not be mistaken with a trust fund in terms of wealth management. This is the payroll tax amount assessed to the officers of the business. Tax resolution can help reduce and or arrange the payment of these taxes.

What is a Trust Fund Recovery Penalty (TRFP)?

A Trust Fund Recovery Penalty can be assessed if the unpaid trust fund taxes cannot be immediately collected from the business. This often happens if the business falls on hard times and taps into that fund for any reason. According International Revenue Code 6672(a) an individual can be held liable for penalty for willful failure to collect, account for, or pay to the IRS the taxes for the business.

Who is Held Responsible for the TRFP?

According to the IRS, the TRFP can be assessed against any person who is: responsible for collecting or paying withheld employment taxes, willfully fails to collect or pay the taxes.

Partial Payment Installment Agreement - Bullseye Tax Relief

Partial Payment Installment Agreement

What is Partial Payment Installment Agreement (PPIA)?

A Partial Payment Installment Agreement (PPIA) is similar to other types of installment agreements allowed by the IRS. The IRS allows you to break down your tax debt into affordable monthly installments. The difference between a PPIA and a regular installment agreement is that the IRS agrees to allow you to pay only a portion of your debt over an allotted amount of time that they determine. Typically, the IRS usually allots the taxpayer two years. You must provide the IRS with a full financial disclosure indicating your wages, assets and expenses to apply for a PPIA. If you cannot afford a regular installment agreement and the amount that you would be paying is unlikely to ever cover the full tax debt, then a Partial Payment Installment Agreement may be the most beneficial course of action for you and your business.

What Are the Eligibility Requirements for a Partial Payment Installment Agreement (PPIA)?

Similar to an Offer in Compromise, the IRS must determine that:

You do not have enough assets worth liquidating to pay off your debt,
Your wages would not cover the payment of your debt in full plus your basic living expenses, and
You do not have the earning potential to cover your debt in the coming years.

Additionally, you must also be unable to pay the minimum payment requirement of a regular installment agreement.

The eligibility requirements for PPIA are:

Why Apply for a PPIA and Not an Offer in Compromise (OIC)?

The IRS is more likely to accept a PPIA than an Offer in Compromise because of its lack of finality. With a PPIA, the IRS can review your ability to pay off your tax debt annually. If your ability to pay the debt in full increases, then the IRS can collect it before the statute of limitation expires. This can produce a better outcome for the IRS than an Offer in Compromise, which is final. If your financial situation improves, the IRS would not be able to collect from you more than what was negotiated with an Offer in Compromise, regardless of your future financial situation.

What is the Statute of Limitation?

The statute of limitation is the period of time that the IRS can lawfully seek payment for your tax debt. After the statute of limitation expires, the IRS cannot collect the tax debt from you. Even if you can afford to pay the debt. The interest and penalties assessed could not be collected either. The statute of limitation to collect a tax debt is 10 years from the date the debt was originally assessed.

Next Step

The application process for a Partial Payment Installment Agreement involves the submission of many forms. The decision must not be taken lightly. It is most beneficial to consult with a tax professional when considering applying for a PPIA. A Partial Payment Installment is usually best if you would not be eligible for an OIC and a regular installment agreement is more than you can afford. Consulting a tax professional will determine if an OIC or PPIA is really the best solution for your situation.