A partial payment installment agreement (PPIA) is an installment agreement with a different destination: the payments are set by what you can afford, and they will not pay the liability in full before the Collection Statute Expiration Date (CSED) — the IRS’s 10-year collection deadline under §6502. When that date passes, whatever balance remains becomes legally uncollectible. Nothing is “forgiven” by settlement; the IRS’s right to collect simply expires, with your payments having covered part of the debt along the way. PPIAs exist under IRC §6159 as reshaped by the American Jobs Creation Act of 2004, and they are worked under IRM 5.14.2 (rev. June 5, 2025).
General information, not tax or legal advice. A PPIA is granted on full financial disclosure and can be revisited every two years — and the IRS may ask you to extend the collection deadline itself. Both facts belong in the decision, not the fine print.
There is no criteria-only route into a PPIA. A complete Collection Information Statement is required for all partial payment agreements — Form 433-A for individuals and/or Form 433-B for businesses (IRM 5.14.2.2.1). Your allowable living expenses are measured against the IRS’s Collection Financial Standards (IRM 5.15.1.8), and the payment is set at the result: monthly disposable income — income minus allowable expenses. It is not a number you propose and the IRS counters; it is computed from your documented finances. PPIAs are non-Simple agreements, so managerial approval is required, and a Notice of Federal Tax Lien determination is part of the process.
Before a PPIA may be granted, equity in assets must be addressed and, where appropriate, used to pay — by borrowing against the asset, selling it, or liquidating it (IRM 5.14.2.1.1, 5.14.2.2(2)). Complete use of equity is not always required, but the direction of the rule matters: where significant equity exists, the IRS considers levy or seizure instead, and a PPIA will not be granted if enforcement is the appropriate action. Firm marketing tends to soften this step. Read it as the IRS writes it: a PPIA is for taxpayers whose income cannot retire the debt and whose assets do not quietly cover it.
Because the 10-year clock keeps running while an agreement is in effect, when a PPIA starts matters as much as how much it pays. Take a $60,000 balance and an ability-to-pay payment of $400 a month:
Two honest caveats. First, interest and penalties accrue throughout (the individual’s failure-to-pay rate is 0.25% per month while an agreement is in effect, IRC §6651(h)), so the balance on paper grows even as you pay — payments offset accruals, they do not freeze them. Second, this arithmetic is why the IRS guards the gate: the later in the statute a PPIA is granted, the more the arrangement resembles letting the clock win, which is precisely what the equity check and the two-year reviews below are for.
PPIAs are the only agreements with which the IRS permits an extension of the collection statute — a Form 900 waiver under §6502(a)(2)(A), available only in certain situations and limited to five years beyond the original CSED (plus up to one further year in specified cases) (IRM 5.14.2.1, 5.14.2.2.3). If you are asked to sign one, you are not completing a formality: you are extending the IRS’s deadline, moving your expiry date years into the future and converting expiring balance into collectible balance. Treat it as a negotiation decision in its own right, and take advice before signing.
The three routes divide by two numbers: what you can pay monthly, and what your assets are worth.
One boundary worth stating: the CSED on this page is a planning input — when it falls decides what a PPIA is worth. Computing your exact CSED, and the events that toll it, is a separate discipline covered in the CNC cluster’s duration pages.
How does a partial payment installment agreement work? You submit a full financial statement (Form 433-A and/or 433-B); the IRS sets a monthly payment equal to your disposable income after Collection Financial Standards allowances, after your asset equity has been addressed. You pay that amount until the 10-year collection statute expires. The remaining balance — which the payments were never sized to cover — then becomes uncollectible, and the agreement ends.
When and how to request a partial payment installment agreement When a Form 433 analysis shows your ability to pay cannot retire the balance before the CSED. There is no online route: the request is made through a revenue officer or ACS with the financial statement, or flagged on a Form 9465 whose proposed payment cannot full-pay by the deadline — the 9465 instructions confirm such a proposal “may be considered for a PPIA.”
What happens to the remaining balance when the collection statute expires? It becomes legally uncollectible. The IRS’s collection right under §6502 ends at the CSED, so any balance still owing — original tax plus accrued penalties and interest that the payments did not cover — is written off the active account. It is not settled or forgiven; the government’s time to collect it has run out.
General information, not tax or legal advice. Sources: IRM 5.14.2 (rev. June 5, 2025); IRM 5.14.1 and 5.15.1.8; IRC §§6159, 6502, 6331(k), 6651(h); Instructions for Form 9465 (Rev. July 2024). Currency verified 2026-10-23.