All taxpayers are expected to immediately full pay delinquent tax liabilities. When this is not possible taxpayers may be allowed to pay their liabilities over a prescribed period of time. Before a PPIA may be granted, equity in assets must be addressed and, if appropriate, be used to make payment. In some cases taxpayers will be required to use equity in assets to pay liabilities. However, complete utilization of equity is not always required as a condition of a PPIA.

If full payment cannot be achieved by the Collection Statute Expiration Date (CSED), and taxpayers have some ability to pay, the IRS can enter into Partial Payment Installment Agreements (PPIAs). The American Jobs Creation Act of 2004 amended IRC 6159 to provide this authority.

IRC 6159, Agreements for Payment of Tax Liability in Installments.

IRC 6331(K), Levy and Distraint, No levy while certain offers pending or installment agreements pending or in effect.

The Director, Collection Policy is the executive responsible for the policies and procedures to be employed by collection personnel.

The program manager, Case Resolution Alternatives (CRA), is responsible for developing and delivering policies, procedures and practices within the installment agreement program.

Field collection group managers and territory managers are responsible for ensuring the guidance and procedures described in this IRM are complied with.

Collection employees are responsible for following the guidance provided in the IRM when processing cases.

Program Reports:

Program Reviews:

Determinations that an installment agreement request was made solely to delay collection require managerial approval.

Independent Administrative Review (IAR) is required when a proposed rejection occurs. The taxpayer may administratively appeal a termination, modification, or rejection of a proposed IA to the IRS Independent Office of Appeals.

The Integrated Collection System (ICS) is a case management system that supports SBSE revenue officers (ROs) in handling delinquent tax cases. In every case, the file must demonstrate that the chosen disposition method is in line with the facts and circumstances outlined in the case, the IRM, and other official guidance. Certain actions taken by ICS users generate systemic approval requests to the manager. All dispositions of Non-Streamlined Installment Agreement (NSIA) cases, including PPIAs, require managerial approval.

The Integrated Data Retrieval System (IDRS) is used to monitor most installment agreements for timely payments on accounts, as well as to determine whether taxpayers remain in compliance with filing and paying requirements. IDRS programming also requires that all open balance due modules on IDRS in a notice or collection status are included when an installment agreement is input.

Collection group managers are responsible for the quality of work performed by the employees they supervise in accordance with IRM 5.13.1, Collection Quality Measurement, Embedded Quality Collection Field Organizations Administrative Guidelines. Managers are required to follow program management procedures and controls addressed in IRM 1.4.50, Resources Guide for Managers, Collection Group Manager, Territory Manager and Area Director Operational Aid.

Frequently used terms in this IRM, along with their definition, include:

This table lists commonly used acronyms and their definitions:

IRM Resources:

Web Resources:

The IRS adopted the Taxpayer Bill of Rights (TBOR) in June 2014. The Internal Revenue Code (IRC) provides taxpayers specific rights. The Taxpayer Bill of Rights (TBOR) groups these rights into ten fundamental rights. See IRC 7803(a)(3), Execution of Duties in Accord with Taxpayer Rights. IRS employees are responsible for being familiar with and following these rights. For additional information about your taxpayer rights, see Pub 1, Your Rights as a Taxpayer or visit https://www.irs.gov/taxpayer-bill-of-rights.

A full Collection Information Statement is required for all PPIAs. Form 433-A, Collection Information Statement for Wage Earners and Self-Employed Individuals and/or Form 433-B, Collection Information Statement for Businesses, must be completed to determine the taxpayer’s ability to pay (refer to IRM 5.15.1.8, Allowable Expense Overview, for determining allowable expenses.)

For all IMF accounts with an Unpaid Balance of Assessment (UBA) less than or equal to ≡ ≡ ≡ ≡ ≡ ≡, compare the current year income information provided by the taxpayer to the income on the last filed return using Command Code (CC) IRPTR and at least one of the following:

For IMF accounts with a UBA above ≡ ≡ ≡ ≡ ≡, or if there is significant equity that cannot be liquidated, the following minimum verification is required:

In addition to the requirements in (3) above, for IMF accounts with an aggregate assessed balance above ≡ ≡ ≡ ≡ ≡ ≡, or if there is significant equity that cannot be liquidated:

Conditional expenses not determined to be necessary are not allowed for PPIAs. Only necessary expenses are permitted. When taxpayers need to adjust above allowable expenses, the minimum time necessary should be provided. See IRM 5.15.1, Financial Analysis Handbook, for a discussion of necessary, conditional and other expenses and when exceptions may be appropriate.

For in-business trust fund accounts, use the guidelines in IRM 5.14.7.4(7), In-Business Trust Fund Installment Agreements Requiring Financial Analysis and Determining Ability to Pay, which state that at a minimum you should:

Because the installment agreement will not fully satisfy the liability, the Trust Fund Recovery Penalty (TFRP) will usually be assessed. As the potential exists for the taxpayer to accrue additional liabilities, the RO needs to ensure the ASED is extended on accounts in which the trust fund balance is below the amount in IRM 5.7.4, Investigation and Recommendation of the Trust Fund Recovery Penalty. IRM 5.7.4.8.1, Considerations for In-Business Installment Agreements provides guidance that the RO can request a signature on Form 2750, Waiver Extending Statutory Period for Assessment of Trust Fund Recovery Penalty, from all potentially responsible persons to extend the statute to the expected end-date of the agreement plus one year. For PPIAs, this date will be the expected CSED expiration.

For out-of-business trust fund accounts, use the guidelines in IRM 5.14.7.4.1, Trust Fund Recovery Penalties and Installment Agreements .

The taxpayer must agree to pay the maximum monthly payment based upon the taxpayer’s ability to pay. When determining the maximum monthly payment both the collectability of the business and that of all individuals responsible for the TFRP should be determined. Consider having the responsible individual(s) that work for the liable entity reduce their salary by the amount of their ability to pay in order to increase the monthly payment of the business. Otherwise, place the responsible individual(s) in an active IA for their TFRP assessment. Taxpayers entering PPIAs who have defaulted an IA in the past 24 months will be required to make monthly payments via DDIA or PDIA unless they are unbanked and unemployed/self employed. If this is not possible, a PPIA may still be granted. The reason that a payroll deduction or direct debit agreement could not be secured must be documented in the case history.

Make a lien filing determination or ensure that a Notice of Federal Tax Lien (NFTL) was previously filed on all aggregate liabilities with a UBA greater than≡ ≡ ≡ ≡ ≡ ≡ ≡. Follow NFTL procedures in IRM 5.12.2.4, Determination Criteria for Do-Not-File or Deferring the NFTL Filing.

The Campus will refer cases for revenue officer assignment in some situations. See IRM 5.14.2.2.6.

No Asset/No Equity Cases: A PPIA may be granted if a taxpayer has no assets or equity in assets; or has liquidated available assets to make a partial tax payment.

Asset Cases: A PPIA may be granted if a taxpayer does not sell or cannot borrow against assets with equity because:

When financial analysis indicates that borrowing against or selling property should be attempted, the taxpayer will normally be required to make a good faith attempt to utilize equity before the IRS will approve a PPIA. This includes applying normal business standards when applying for loans using equity as collateral. Taxpayers will also be required to submit copies of all documents that are used in the loan application process.

If the taxpayer does not comply with the requirement of making a good faith attempt to use equity in assets or is not willing to make monthly payments consistent with ability to pay, the taxpayer will be considered a "won’t pay" and seizure/levy action may be appropriate. If enforcement action is appropriate, a PPIA will not be granted. If the taxpayer is in pending IA status, follow rejection procedures in sections IRM 5.14.1.3, Identifying Pending, Approved and Rejected Installment Agreement Proposals on IDRS, and IRM 5.14.9.3, IDRS Monitoring. The case history should be documented with a statement as to why the PPIA was not granted.

If the taxpayer is unable to secure a loan or liquidate an asset following a good faith attempt to do so, the revenue officer will need to make a seizure/levy determination (see IRM 5.10.1.5, Actions Required Prior to Seizure by IRC 6331(j).

If it has been determined that enforcement action is not appropriate, a PPIA can be granted. The case history should be documented as follows: "Seizure (or levy) of (name of asset) has been considered, but it is not the appropriate resolution because (provide reason)" .

Consider securing a waiver with a PPIA where there is an asset that will come into the possession of a taxpayer after the CSED and liquidation of that asset offers the best case resolution (in lieu of liquidating existing assets to partially pay the liability).

A waiver is no longer required to be secured when the taxpayer’s only ability to satisfy the tax liability after the CSED expiration is through a continuation of the installment agreement and there is no significant change in ability to pay as identified through the two year financial review process.

The waiver can only be secured at the inception of the PPIA and not during the two year review process, unless a new PPIA is executed at that time. A waiver should not be obtained at the time the PPIA is reinstated. The length of the extension must be based on the time that it will take to make payments and cannot exceed five years plus one year to provide for other administrative actions.

When a Form 900, Tax Collection Waiver, is secured, the CSED must be updated on ICS for all periods that are extended by the waiver by:

Ensure the taxpayer is in compliance with filing, withholding, federal tax deposit and estimated tax payment requirements (see IRM 5.14.1.4.2, Compliance and Installment Agreements).

Document ICS with the justification for the PPIA as the best case resolution.

Include all balance due accounts for which the taxpayer is liable, including pre-assessed modules.

Use installment agreement closing option A (preferable method) or B on ICS.

Agreement Locator Numbers (ALNs) are four digit codes (XXYY) that indicate specific types of processing will occur at the Campus level. ICS selects the proper ALN for PPIAs.

For PPIAs granted to taxpayers whose accounts are not on ICS, choose the proper ALN for PPIAs as follows:

Review Suppress Indicators (RSI) instruct Campuses to reissue installment agreements under certain conditions after the two year review. ICS selects the proper RSI for PPIAs granted using ICS, however for PPIAs granted to taxpayers whose accounts are not on ICS, use RSI "5" and choose a review cycle two years in the future.

Mark the top of the Installment Agreement form (Form 433-D), in red as "PPIA" .

If a Form 900 is secured in conjunction with a PPIA, a copy of the installment agreement and the original Form 900 will be sent to CCP using a manually prepared Form 3210 addressed to:

The original Form 900 will be maintained in CCP for three years beyond the latest date to which the CSEDs are extended (See IRM 5.4.10.8.1(10), Inputting and Filing Form 900 Waiver).

If Option B on ICS is used to close the case as a PPIA, use the systemically generated Form 3210 to route the agreement to the appropriate Mail Stop at CCP. Closed case files should be routed to CCP at Mail Stop 5-E04.115.

All PPIAs require managerial approval. The group manager must review these cases to ensure that they reflect the following documentation:

If a manager does not believe that the PPIA is the appropriate resolution follow the procedures in IRM 5.14.9.7, Independent Administrative Review after Recommended Rejection of Installment Agreement Requests. The case history should be documented with a statement as to why the PPIA was not granted.

If taxpayers have assets and request PPIAs from campus functions (including ACS) and meet the equity thresholds provided below, cases will be transferred for revenue officer assignment. (See IRM 5.19.1, Balance Due, for campus procedures.)

These referrals from campus will be sub coded on ICS depending on where the case originated:

Significant equity thresholds used by campus for transfers to revenue officers:

Regardless of the time remaining on CSEDs, timely appeals of installment agreement rejections, terminations, and proposed terminations must be referred to Appeals. When referring balance due accounts with CSEDs that expire within 120 days, notify Appeals of the imminent CSED(s). Cases will not be considered transferred to Appeals unless confirmation of transfer is received, and documented, by the referring function.

Appeals will attempt to resolve all issues prior to CSED expiration. If Appeals returns balance due accounts with CSED(s) that expire within 120 days (to referring functions) it will notify the function(s) of the imminent CSED(s). Cases will not be considered transferred to other functions (by Appeals) unless confirmation of transfer is received and documented by Appeals. (See IRM 5.14.9, Routine and Manually Monitored Installment Agreement Dispositions, Independent Review and Appeals, for additional Appeals information.)

CSED extensions based on waivers secured with installment agreements actually expire 90 days after the expiration of any period for collection agreed upon in writing by the Secretary and the taxpayer at the time the installment agreement was entered into. (See IRC 6502(a)(2)(A), and Treas. Reg. 301.6502-1(b)(1).) These waivers remain in effect regardless of:

For CSED extensions/waivers obtained prior to January 1, 2000 and not secured with installment agreements, the statutory period for collection will expire on December 31, 2002, or at the end of the original ten year statutory period for collection if after December 31, 2002. (See IRC 6502(a)(2) and section 3461(c)(2) of RRA 1998).