Partial Payment Installment Agreements (PPIA) – An Alternative to OIC and How the Los Angeles-Based Tax Firm of Mike Habib, EA Can Help

Tax debt can cast a long shadow over your life—an unrelenting burden of unpaid balances, mounting penalties, and the constant threat of IRS collection actions like wage garnishments or bank levies. For many in Los Angeles, where the cost of living already stretches budgets thin, a massive tax bill feels like a financial death sentence. The IRS offers relief options, such as the Offer in Compromise (OIC), but its strict requirements leave countless taxpayers searching for alternatives. Enter the Partial Payment Installment Agreement (PPIA)—a lesser-known but powerful tool that lets you pay what you can afford over time, potentially leaving the rest to expire. Navigating this process, however, is no walk in the park. That’s where the Los Angeles-based tax firm of Mike Habib, EA, steps in, turning a daunting tax maze into a manageable path forward. In this article, we’ll explore what a PPIA is, how it stacks up against an OIC, and how Mike Habib’s expertise can secure the relief you need.

What Is a Partial Payment Installment Agreement (PPIA)?

A Partial Payment Installment Agreement is an IRS payment plan designed for taxpayers who can’t fully settle their tax debt, even with extended terms. Unlike a traditional Installment Agreement (IA), which aims to clear the entire balance—principal, interest, and penalties—over time, a PPIA lets you make smaller monthly payments based on your disposable income. The catch? You may not pay off the full amount before the IRS’s 10-year collection statute of limitations expires, at which point the remaining debt could vanish.

Imagine owing $50,000 but only affording $200 a month. A standard IA might demand $600 monthly to clear it in a decade, but a PPIA aligns with your reality—$200—potentially forgiving the unpaid $26,000 after 10 years. It’s a pragmatic compromise: the IRS collects what it can, and you avoid financial ruin. Mike Habib, EA, and his Los Angeles firm specialize in making this option work for you.

PPIA vs. Offer in Compromise (OIC): What’s the Difference?

The OIC often steals the spotlight with its promise of settling tax debt for less than you owe—say, $10,000 on a $50,000 bill—if you prove paying in full would cause hardship or the debt’s collectibility is doubtful. It’s a clean break, typically paid in a lump sum or short-term plan (within 24 months). But the OIC’s allure comes with a steep hurdle: only about 32% of applications were accepted in 2022, per IRS data. The agency’s Reasonable Collection Potential (RCP) formula—factoring income, assets, and expenses—often deems applicants capable of paying more, leading to rejection.

A PPIA, by contrast, is less about a grand bargain and more about steady progress. It doesn’t require liquidating assets or proving uncollectibility—just that you can’t swing a full IA payment without hardship. Payments stretch over years, and if your finances improve, the IRS might adjust them; if not, the debt dwindles with time. Mike Habib’s firm excels at identifying when a PPIA beats an OIC for Los Angeles clients, tailoring relief to your unique situation.

Who Qualifies for a PPIA?

The IRS doesn’t publish a rigid PPIA checklist, but eligibility hinges on financial reality. You’re a candidate if:

• Full Payment Causes Hardship: Paying the standard IA amount would leave you unable to cover basics—rent, food, utilities—per IRS allowable expense standards.
• Tax Returns Are Current: All required filings must be up to date.
• Disposable Income Is Limited: After allowable expenses, what’s left determines your PPIA payment—often too little to clear the debt in 10 years.

For a single Angeleno earning $40,000 with $38,000 in allowable expenses and $60,000 in tax debt, a PPIA could mean $150 monthly payments instead of $700. Mike Habib, EA, ensures your case proves this hardship, avoiding asset sales that an OIC might demand.

Get professional tax help today by calling us at 1-877-788-2937.

How to Secure a PPIA—and How Mike Habib Makes It Happen

Getting a PPIA isn’t as simple as filling out a form; it’s a negotiation with the IRS. Here’s the process, and how Mike Habib’s Los Angeles firm streamlines it:

1. Assess Your Finances: Complete Form 433-A (individuals) or 433-B (businesses), detailing income, expenses, assets, and liabilities. Mike Habib’s team ensures accuracy, maximizing allowable expenses—like LA’s high housing costs—while avoiding red flags.
2. Request via Form 9465: File the Installment Agreement Request form, specifying a PPIA and proposing a payment you can handle. Mike Habib calculates this based on your disposable income, presenting a compelling case to the IRS.
3. Negotiate with the IRS: An agent reviews your finances, often pushing for higher payments or asset liquidation. Mike Habib, EA, steps in as your advocate—armed with tax law expertise and local insight—securing terms that fit your budget. His firm handles the back-and-forth, sparing you the stress.
4. Stay Compliant: Once approved, make payments on time and file future returns promptly. Mike’s team monitors this, preventing defaults that could revive collections.

The process can take weeks or months, but Mike Habib’s firm cuts through the red tape, ensuring approval and affordability.

Benefits of a PPIA with Mike Habib’s Help

A PPIA offers relief, and Mike Habib amplifies its impact:

• Affordable Payments: Mike ensures your monthly amount reflects what you can truly pay—say, $200 versus $600—keeping you afloat.
• Collection Freeze: Levies and garnishments stop as long as you comply, a safeguard Mike’s firm locks in.
• Debt Expiration: After 10 years, unpaid balances may vanish. Mike tracks the statute, maximizing this potential write-off.
• Flexibility: Income drops? Mike renegotiates lower payments; it rises? He adjusts proactively to avoid shocks.

Drawbacks to Consider

Even with expert help, a PPIA has limits:

• Accruing Interest and Penalties: These grow on the unpaid balance, though Mike Habib often secures penalty abatements to ease the load.
• Long-Term Commitment: Payments could span years, unlike an OIC’s quick resolution.
• Periodic Reviews: The IRS may reassess your finances, but Mike’s firm mitigates payment hikes with updated evidence.

How Mike Habib, EA, and His Los Angeles Firm Shine

Based in the heart of Los Angeles, Mike Habib, EA, leads a tax firm that’s a beacon for taxpayers facing IRS woes. As an Enrolled Agent—federally licensed to represent you—Mike brings decades of experience, a mastery of IRS protocols, and a deep understanding of LA’s economic pressures. Here’s how his firm transforms your PPIA journey:

• Tailored Financial Analysis: Mike’s team digs into your books, aligning expenses with IRS standards while spotlighting LA-specific costs (e.g., $2,000 rent vs. a national $1,200 cap) to justify lower payments.
• Negotiation Prowess: IRS agents can be tough, but Mike Habib counters with evidence and policy know-how, securing PPIA terms others might miss—like a $100 monthly deal on a $40,000 debt.
• Penalty Relief: Facing a $5,000 penalty? Mike petitions for abatement citing “reasonable cause” (e.g., medical hardship), often saving thousands.
• Compliance Oversight: His firm tracks payments and filings, preventing defaults that could unravel your agreement.
• Holistic Planning: Beyond the PPIA, Mike explores long-term fixes—OICs, CNC status, or business restructuring—customized for LA’s high-stakes market.

Get professional tax help today by calling us at 1-877-788-2937.

Consider a local freelancer owing $70,000 after a slow year. Mike Habib’s firm proves $1,800 monthly income barely covers $1,700 in expenses, landing a $50 PPIA payment—saving them from a $900 IA demand and staving off collections.

Real-Life Wins with Mike Habib

• The Single Parent: Earning $45,000 with $55,000 in debt, they face a $600 IA. Mike secures a $150 PPIA, keeping their family housed.
• The Small Business: A $100,000 debt threatens closure. Mike’s team negotiates a $300 monthly PPIA, buying time to recover.
• The Retiree: On a $2,000 pension with $30,000 owed, Mike lands a $75 PPIA, preserving their fixed income.

Beyond the PPIA: Ongoing Support

Mike Habib’s firm doesn’t stop at approval. They monitor the 10-year clock, adjust for life changes (e.g., a new job), and prep for future tax seasons—ensuring your Los Angeles lifestyle isn’t derailed by past debts.

Final Thoughts

A Partial Payment Installment Agreement offers a lifeline when tax debt looms large—an alternative to the elusive OIC that fits real-world budgets. For Los Angeles taxpayers, Mike Habib, EA, and his firm turn this option into a triumph. From crafting your application to negotiating with the IRS, they deliver relief with precision and care. Don’t let tax woes define you—reach out to Mike Habib’s team today. In a city of big dreams and bigger bills, they’re your partner in reclaiming financial freedom, one affordable payment at a time.

Get professional tax help today by calling us at 1-877-788-2937.