If you owe tax debt with the IRS, you should look into all your available options on how to resolve that debt. In analyzing these choices, the best decision should rise to the top depending upon the amount of debt, its expiration date, your income, expenses, and assets, along with upcoming transactional goals. With all these factors to weigh, sometimes the best solution is the one that falls through the cracks, and that could be the Partial Payment Installment Agreement, or “PPIA”. A PPIA is a payment plan the IRS offers that concludes that you can afford monthly payments, but that those monthly payments are not high enough to fully pay the liability before the tax debt expires.
Financial Based IA
In other articles, we discussed the financial based installment agreement, and the PPIA is one of those. The unique difference is that the financials convey that the remaining income, the monthly payment available to the IRS, is not large enough to fully pay the liability. Tax debt expires roughly 10 years from the last date of assessment. So if the math worked that the monthly payment would not pay off the debt after that expiration debt, the remaining balance expires. This is a backwards way of possibly saving thousands of dollars based upon your true financial abilities. Remember though, entering a financial based IA is a lot of work, with phone calls, forms, and much required substantiation.
Why Not OIC?
If you cannot afford to pay the debt off before it expires, isn’t that an Offer in Compromise? Not necessarily. Remaining income is a factor in an OIC, but there are other relevant factors as well, such as equity in assets. If there are multiple assets above the liability owed, an OIC is not an available option to you. Also, if the OIC calculation results in a settlement that is literally impossible, a PPIA might make better sense.
Why Not CNC?
Cannot fully pay the debt and proving to the IRS a financial hardship, why not a Currently Not Collectible? A CNC is only available if there is zero remaining income. Here, you are showing a remaining income after you pay your bills. This could be $50, but it is greater than zero which means the IRS can collect something. Therefore, a currently not collectible is not available.
Plan C
The PPIA is a great tool when others aren’t quite obtainable. It should be thought of in that light. This should never be considered a Plan A to look at first, but should be the deduced option when other better options are just out of reach. However, it is better than plan D, E, or F. Don’t negate this option if the shinier resolutions are off the table, it is still a way to save money with the IRS. Give us a call 800-822-4122 to learn your options.