Partial Payment Installment Agreements with the IRS – some requirements

According to the Internal Revenue Manual Chapter 5.14.2.1.1 a full Collection Information Statement is required for all Partial Payment Installment Agreements (PPIA’s). IRS Forms 433A or 433B must be completed to determine the taxpayer’s ability to pay

Conditional expenses are not allowed for PPIAs. Only necessary expenses are permitted.

For in-business trust fund accounts (employment tax obligations), use the guidelines in IRM 5.14.7.4(7), (IBTFIA guidelines), which state that at a minimum you should:

1. Verify income and expenses. Use bank statements to verify both income and expenses;
2. Request documentation if assets, liabilities, expenses or income appear questionable;
3. Complete record checks to determine ownership and equity in real and personal property, including motor vehicles;
4. If appropriate, request that taxpayers sell assets or borrow on equity in assets in order to make payment on the delinquent taxes;
5. As noted in IRM 5.14.7.2(1)(b), ensure that the taxpayer has the ability to pay current taxes as well as operating expenses and pay delinquent taxes.

For out-of-business trust fund accounts, use the guidelines in IRM 5.14.7.4.1(13).

Because the underlying liability will not be fully paid, the trust fund recovery penalty will usually be assessed. The only exception to this requirement is in circumstances in which there is no collection potential from the responsible officers.

The taxpayer must agree to pay the maximum monthly payment based upon the taxpayer’s ability to pay.