PPIA Calculator IRC § 6159

A PPIA is an IRS payment plan where your monthly payments are based on what you can actually afford, not what you owe. Unlike a standard installment agreement that requires full payoff before the Collection Statute Expiration Date (CSED), a PPIA allows you to make affordable payments until the CSED expires. Any remaining balance is then legally forgiven. This is authorized under IRC § 6159(a) and detailed in IRM 5.14.2.

A standard Installment Agreement requires you to pay the full balance before the 10-year CSED expires. The IRS calculates your payment to ensure full payoff. With a PPIA, payments are based purely on your ability to pay (disposable income). You might pay only a fraction of your debt, with the rest forgiven at CSED. PPIAs are for taxpayers who genuinely cannot afford to pay in full.

Both PPIA and OIC can result in paying less than you owe, but they work differently. An OIC requires either a lump sum (within 5 months) or short-term payments (24 months) and the IRS must accept your offer. During OIC, the CSED clock stops. A PPIA has ongoing monthly payments but the CSED clock continues running. According to IRS data, PPIAs are approved more frequently than OICs. Your results may differ. PPIA is better when you have regular income but can't afford full payment.

To qualify for a PPIA you must: (1) Have some monthly disposable income (not zero), (2) Be unable to pay the full balance before CSED expires, (3) Have all required tax returns filed and be current, (4) Be current on estimated tax payments if self-employed, (5) Not be in open bankruptcy proceedings, and (6) Not have a pending Offer in Compromise. The IRS will analyze your financial situation using Form 433-A or 433-F.

Your PPIA payment is your monthly disposable income: gross income minus IRS allowable expenses. The IRS uses National Standards for food, clothing, and healthcare, and Local Standards for housing and transportation based on your county. Any positive disposable income becomes your payment. The minimum is typically $25/month. If you have zero or negative disposable income, you may qualify for Currently Not Collectible (CNC) status instead.

For July 2024, PPIA setup fees are: Direct Debit (DDIA): $31, Payroll Deduction: $31, Non-Direct Debit (check payments): $178. Low-income taxpayers (below 250% of federal poverty level) may qualify for reduced fees: Direct Debit is waived ($0), Non-Direct Debit is $43 (reimbursed on completion). Note: Unlike standard IAs, PPIA cannot be set up online - you must call the IRS or mail Form 9465.

The IRS reviews PPIA agreements at least every two years to verify your ability to pay. You must provide updated financial information (Form 433-A or 433-F). If your income has increased, your payment may go up. If your situation has worsened, payments may decrease. Failure to respond to IRS requests or provide documentation can result in default of your agreement. Always respond within 30 days.

No, unlike standard installment agreements, PPIA cannot be requested through the IRS Online Payment Agreement tool. You must call the IRS at 1-800-829-1040 or mail Form 9465 with "PPIA Request" written at the top. You will also need to submit Form 433-A (detailed) or Form 433-F (simplified) to document your financial situation. Processing takes 4-8 weeks by mail.

No. Interest and penalties continue to accrue on your tax debt during a PPIA, just as they do with any IRS payment plan. The interest rate is the federal short-term rate plus 3% (7% as of 2025), compounded daily. However, the failure-to-pay penalty is reduced from 0.5%/month to 0.25%/month while you're in an active installment agreement. Despite the accrual, you still save money because the remaining balance is forgiven at CSED.

If you miss payments, fail to file required tax returns, or don't pay current-year taxes, your PPIA will default. The IRS will resume collection actions including levies and liens. You may be able to reinstate the PPIA, but if you defaulted within the prior 24 months, you'll be required to set up Direct Debit (automatic bank withdrawal) as a condition of the new agreement. Multiple defaults make future agreements harder to obtain.

The IRS may file a Notice of Federal Tax Lien (NFTL) for debts over $10,000, even with a PPIA in place. The lien protects the government's interest in your property. However, under the Fresh Start program, the IRS generally won't file a lien for balances under $10,000. The lien will be released when you pay the debt in full, or it can be withdrawn under certain circumstances (Form 12277).

The forgiveness amount depends on three factors: (1) Your monthly payment amount, (2) The number of months remaining until CSED, and (3) Your total debt including accrued interest/penalties. For example, if you owe $50,000, pay $300/month for 72 months remaining, you'll pay $21,600 - with approximately $28,400+ forgiven (plus continued accrual reduces actual forgiveness). Our calculator projects your specific forgiveness amount.