How to Request a Partial Payment Installment Agreement (PPIA)

Quick overview

A Partial Payment Installment Agreement (PPIA) gives taxpayers who cannot pay their full tax debt a structured plan to make reduced monthly payments for a set period. It’s intended for people whose verified income and allowable expenses leave insufficient discretionary cash flow to fully satisfy the tax liability within the IRS collection period. A PPIA can stop immediate enforced collection actions if approved, but interest and penalties usually continue to accrue on unpaid tax.

(Author’s note: In my 15+ years helping clients with tax collection issues, I’ve found that clear documentation and a conservative, realistic payment proposal materially increase approval odds. This article explains how to apply, what the IRS reviews, and practical tips to avoid common pitfalls.)

Sources: IRS guidance on installment agreements and settling tax debt (IRS: https://www.irs.gov/payments/submit-your-installment-agreement-application; IRS: https://www.irs.gov/individuals/how-to-settle-your-tax-debt) — references current as of 2025.

Step-by-step: How to request a PPIA

1. Confirm a PPIA is the right path

• A PPIA is different from a standard installment agreement (where you can afford full payment over time) and from an Offer in Compromise (which settles the liability for less than full amount). If you have zero realistic ability to pay the full balance over the IRS collection period, a PPIA may be appropriate. See our guide on when to use a PPIA for help deciding: When to Use a Partial-Payment Installment Agreement.

1. Collect required financial documentation

The IRS needs current, detailed financial information to evaluate a partial-pay plan. Typical documents include:

• Recent pay stubs and documentation of other income (rental, investment, unemployment).
• Bank statements for the previous 2–3 months.
• Proof of monthly expenses: rent/mortgage, utilities, health insurance, car payments, child support, medical expenses, groceries, and mandatory retirement plan contributions.
• Statements for other debts (credit cards, student loans) and any secured loans.
• Recent tax returns.

The exact form(s) you’ll use to report this information are discussed next.

3. Complete the IRS forms

• Form 9465, Installment Agreement Request — use this to request any installment agreement. (IRS: https://www.irs.gov/pub/irs-pdf/f9465.pdf)
• A Collection Information Statement — either Form 433-F (Collection Information Statement) or Form 433-A (Collection Information Statement for Wage Earners and Self-Employed). The IRS may request Form 433-A for certain taxpayers and Form 433-F is the general-purpose form used by the IRS for collection evaluation. Complete the form thoroughly and attach supporting documents. (IRS forms and instructions: https://www.irs.gov/businesses/small-businesses-self-employed/collection-information-statements)

Note: A PPIA almost always requires a full financial disclosure; streamlined online installment requests that don’t require financial statements are typically for full-pay plans.

4. Draft a conservative proposed monthly payment

Use your collected documentation to calculate discretionary income (income minus verified allowable living expenses). Propose a monthly payment the IRS will accept as reasonable given your finances. Be conservative — proposals that look like you are hiding ability to pay are likely to be rejected. I advise clients to set a proposal that still leaves a small cushion for unexpected expenses.

5. Submit the application

• Most PPIA requests are submitted by mail or through the IRS collection officer handling your case. If you received a levy or collection notice, follow the instructions on that notice. The IRS also accepts certain submissions via fax if directed by a revenue officer. Online methods generally do not support partial-pay installment requests because they require submission of financial statements.

5. IRS review and possible follow-up

An IRS examiner reviews the financial statement and may request additional documents or explanations. The IRS will calculate a payment amount based on allowable living expense standards (national and local standards plus verified expenses) and your equity in assets. The agent then either accepts, proposes a modified payment, or denies the request.

7. Approval, terms, and reviews

If approved, you’ll receive written agreement terms with the monthly payment, payment start date, and the review period. PPIAs are subject to periodic financial reviews — the IRS can request updated Form 433-F or income documentation and can increase payments if your finances improve. Interest and penalties continue to accrue until the debt is paid.

How the IRS calculates a PPIA monthly amount

The IRS evaluates your ability to pay using three main levers:

1. Income documentation — wages, self-employment, passive income, benefits.
2. Allowable living expenses — IRS national and local standards (for food, clothing, housing, utilities, transportation) plus verified out-of-pocket expenses like medical costs.
3. Equity in assets — cash, bank accounts, real estate equity, vehicle equity, retirement accounts (some retirement accounts may be protected under law but can still figure into calculations).

The agent will determine how long the IRS has to collect (usually the statutory 10-year Collection Statute Expiration Date) and compare your disposable income to what could be collected over that period. If you cannot pay the full amount within the collection period, a PPIA may be approved at a reduced monthly payment that the IRS expects to collect over time. See our article on How the IRS Calculates Installment Agreement Payment Amounts for more detail.

Practical tips to improve approval chances (from my practice)

• Be transparent. I’ve seen cases denied where taxpayers omitted rental income or took unrealistically low expenses. Full disclosure avoids costly denials.
• Use accurate, recent documents. The IRS gives weight to current bank and pay records.
• Don’t understate assets. Equity in property and retirement accounts is considered; hiding assets increases the chance of denial and potential penalties.
• Propose a payment you can actually make. If you default, the IRS may pursue enforced collection like liens or levies.
• Work with an authorized representative if you’re uncomfortable dealing with IRS collection officers. A power of attorney (Form 2848) lets a CPA or enrolled agent negotiate on your behalf.

What happens to penalties, interest, and refunds?

• Interest and penalties continue to accrue on the unpaid balance even under a PPIA; the payment reduces the principal slowly, which means interest may remain material over time.
• Future tax refunds may be offset against the outstanding liability unless an arrangement specifies otherwise.
• A PPIA does not erase tax liens automatically; depending on the case and balance, the IRS may file or keep a Notice of Federal Tax Lien in place.

When a PPIA may be converted or replaced

• If your financial situation becomes worse, you can request a modification or consider Currently Not Collectible (CNC) status. Our guide explains How to Convert a Partial-Payment Installment Agreement to Currently Not Collectible Status.
• If your finances improve, the IRS will likely require payment increases. Expect periodic reviews; failure to comply can lead to default and enforced collection.

Common mistakes to avoid

• Filing incomplete financial statements.
• Proposing a payment based on wishful thinking rather than verified discretionary income.
• Assuming that a PPIA stops interest and penalties.
• Missing required follow-up documentation requests from the IRS.

Real-world example (adapted from client cases)

Case: A client with a $28,000 balance after unexpected medical bills could not pay in full and had monthly disposable income of only $250 after verified living expenses. We completed Form 433-F showing detailed medical and living expense documentation and proposed $250 monthly. The IRS approved a PPIA with mandatory annual financial reviews. The plan reduced immediate collection pressure and preserved essential cash flow while payments gradually reduced the balance (interest continued to accrue). This outcome is typical when the financial statement is complete and conservative.

Next steps and checklist before you apply

• Collect pay stubs, bank statements (2–3 months), and receipts for large expenses.
• Complete Form 9465 and the appropriate Collection Information Statement (Form 433-F or 433-A) thoroughly.
• Calculate a realistic monthly payment and prepare a short cover letter explaining recent hardship (job loss, medical bills, reduced business revenue).
• Keep copies of everything you submit; send by certified mail if you are mailing documents to an IRS office.
• Consider hiring a tax professional to represent you if the case is complex.

Where to get official forms and help

• IRS Installment Agreements and application information (IRS: https://www.irs.gov/payments/submit-your-installment-agreement-application)
• IRS information on settling tax debt and payment options (IRS: https://www.irs.gov/individuals/how-to-settle-your-tax-debt)

Professional disclaimer: This article is educational and does not constitute tax or legal advice for your specific situation. Rules and IRS procedures can change; consult a qualified tax professional or the IRS directly before taking action.

Related FinHelp resources:

• When to Use a Partial-Payment Installment Agreement: https://finhelp.io/glossary/when-to-use-a-partial-payment-installment-agreement/
• Partial-Payment Installment Agreements: What to Expect: https://finhelp.io/glossary/partial-payment-installment-agreements-what-to-expect/
• How the IRS Calculates Installment Agreement Payment Amounts: https://finhelp.io/glossary/how-the-irs-calculates-installment-agreement-payment-amounts/

(Last reviewed: 2025)