Partial Pay Installment Agreement

Have any of you negotiated a PPIA for a client whose 433-F shows that monthly necessary living expenses equal or exceed monthly income? I have a client whose only significant asset is his mobile home which the county taxing authority has valued at $71,000. He owes the IRS about $150,000 including penalties and interest for years back to 2012.

Just curious as to what the IRS may be asking for a monthly payment under these circumstances and how they would determine the payment amount given he has limited ability to pay?

We are also looking at an OIC, but his RCP would be about $60,000 and his only means to paying the offer amount would be to sell the mobile home which is his residence which he believes would sell for not more than $45,000, which is what he paid for it in 2016. He is married and has four dependents, so he doesn't want to sell, so that is why we are looking at the PPIA.

Thanks.

Yes. I believe the formula is: Monthly income minus monthly expenses (based on the national collection standards for certain categories, although you can present evidence that the taxpayer must pay more than the standard in some cases) equals the amount the IRS will accept. I've had a couple of cases where that result was a negative number, so then the IRS puts them in Currently Non-Collectible status (CNC). It sounds like CNC is a great fit here.

But it also sounds like the OIC would be a good fit if you check the box for Effective Tax Administration on Form 656 Section 3. Then you would have to explain that the taxpayer wouldn't have a place to live if he sold the mobile home to pay the tax debt.

Thank you very much for your input.