What Is A Partial Pay Installment Agreement?
What's a partial pay installment agreement? A partial pay installment agreement is a situation where you owe the IRS more than you can financially afford to pay them in the time period they have to collect it. A lot of people don't realize the IRS has 10 years from the date of assessment to collect the tax. So after that 10 year period runs, and there are different things that control that time period such as a bankruptcy, appeals, things like that, but typically speaking you're dealing with a 10 year period from the day of assessment. After that period runs then you no longer owe the debt and the debt goes to zero. So when they're looking at an installment agreement and your financial situation they consider that fact. So if you can only afford based on your financial documentation to pay $300 a month and they only have three years left to collect but you owe $50,000 you might not be able to pay that amount but they will agree, in certain circumstances where you can verify that, to accept that. That's called a partial pay installment agreement. So what that means is you're willing to pay as much as you can afford to pay for the time that the IRS has to collect the debt. Then after that time period runs out the debt goes to zero, all liens are released and you no longer owe a debt. What you do want to be careful about is when you're signing up for the installment agreement under those situations is that you don't sign anything that agrees to extend that collection statute expiration date.
The collection statute expiration date is that date at which the 10 year period runs and so when you're signing all of your installment agreements if you don't have a professional helping you definitely read those carefully and make sure that you're not signing anything that extends that collection statute expiration date period.