Established as recently as 2005, the partial payment installment agreement allows you to make monthly payments towards the repayment of your IRS tax debt. However, instead of paying off the entire amount of debt owed, you will only make payments for a certain amount of time, paying off a portion of the total amount. This method is used when the IRS doubts that you will be able to pay off the debt of the balance, but still expects a reasonable amount of collectability from you.
There are several aspects of your situation that the IRS will review and consider; including your debt balance, the remaining statute of limitations on the debt and your collection potential. Filing for the agreement involves utilizing a complex equation to determine total debt and payments owed as well as several months of backup documentation, a formal request, and the completion of both IRS Forms 9465 and Form 433-A.
It is recommended that you at least meet with a tax professional to determine if this is the right course of action for you.