Dallas General Contractor with $156,000 Across Five Tax Years

Situation

A Dallas general contractor accumulated about $156,000 in income and self-employment tax across five tax years of uneven project cash flow. Business had stabilized, but not enough to repay $156,000 within the time the IRS had left to collect. A standard installment agreement would have demanded payments he could not sustain without going under again.

The IRS Problem

The balance was large and spread across multiple years, each with its own collection statute. A full-pay plan was mathematically impossible at his real ability to pay. But because his disposable income was limited, he was a candidate for a Partial Pay Installment Agreement — affordable monthly payments, with the IRS accepting that it may not collect the full amount before the statutes expire.

Risks if Ignored

• A filed tax lien and potential levies on accounts or receivables.
• Payments set too high under a standard plan, risking default.
• Penalties and interest compounding across all five years.
• Missing the periodic financial review and losing the partial-pay terms.

Resolution Path

1. 1Confirm all five years are filed and pull transcripts for each balance and statute date.
2. 2Complete a Collection Information Statement documenting income and allowable expenses.
3. 3Calculate an affordable monthly payment based on actual disposable income.
4. 4Request a Partial Pay Installment Agreement at that sustainable amount.
5. 5Keep current on filings and prepare for periodic IRS financial reviews.

Key Lessons

• A PPIA matches payments to what you can truly afford, not the full balance.
• Each tax year has its own collection statute; balances can expire when it runs out.
• Filing all years first is required before any agreement can be approved.
• Expect periodic reviews — a PPIA can be adjusted if your income changes.

Relevant Resolution Options

Frequently Asked Questions