IRS Payment Plans for Businesses: The $25,000 and $50,000 Lines and What Lies Above Them

Businesses can pay the IRS over time too. But the rules are written with one worry in mind: a business that keeps operating while it falls further behind. That worry explains almost every difference between a business payment plan and an individual one, from the lower threshold for payroll taxes to the requirement that current deposits be made before anything else.

By January 30, 2026 the IRS had issued interim guidance extending its new Simple Payment Plan approach to business accounts, and on July 21, 2026 it wrote those rules into IRM 5.14.5. Here is how the current system works.

Trust fund or not: the first question

Everything turns on whether the balance includes trust fund taxes: income tax withheld from employees and the employees' share of Social Security and Medicare taxes, which the business holds in trust for the government. Unpaid trust fund taxes can also be assessed personally against responsible people through the Trust Fund Recovery Penalty under IRC 6672.

IRM 5.14.5.1.6 defines the other category. Non-trust fund taxes are liabilities that do not include unpaid trust fund taxes, and the IRM's examples include corporate income taxes, civil penalties, and employment tax liabilities when the trust fund portion has been paid in full and only the employer's share, penalties or interest remain.

Simple Payment Plans for non-trust fund balances: $50,000

Under IRM 5.14.5.2, business accounts without trust fund taxes qualify for the Simple Payment Plan on the same terms as individuals: an assessed balance of $50,000 or less, a payment that clears the balance including accruals by the collection statute expiration date, all returns filed, and current deposits and estimated payments. No financial statement, no managerial approval, no required lien determination, and no required direct debit. Out-of-business sole proprietors also fall in this $50,000 category.

The IRS's Simple Payment Plans page, reviewed June 27, 2026, summarizes the business limits the same way: $50,000 or less without trust fund taxes; $25,000 or less with trust fund taxes, or $50,000 or less for an out-of-business sole proprietorship.

Simple Payment Plans for trust fund balances: $25,000

For businesses that owe trust fund taxes, IRM 5.14.5.4 creates the Simple Payment Plan (Business Trust Fund), which replaced the old in-business trust fund express agreement. The criteria:

• The unpaid balance of assessment is $25,000 or less, including any pre-assessed amounts.
• The payment clears the balance, including accruals, by the collection statute expiration date. The old 24-month payoff requirement was removed.
• Filing and payment compliance is verified. If the business is not current on filing, no plan can be granted.
• The business may pay the balance down to $25,000 before the plan is granted, but may not use the first installment to get there.

When the business qualifies, the IRM says Field Collection is not required to make a field call to verify assets, no financial statement is required, banking and accounts receivable information is documented, no direct debit is required, and no managerial approval is required.

Two situations disqualify a business from this plan regardless of balance: when the plan request is made together with a request to release a levy, and when the case meets the solely to delay criteria, which the IRM says includes indications the business may be using pyramiding or successor entities to avoid its tax responsibilities. In those cases, the revenue officer does the full financial analysis and trust fund penalty work. See requests the IRS treats as made to delay.

The trust fund penalty question

On a trust fund balance, the IRS also has to decide whether to assess the Trust Fund Recovery Penalty against the owners and officers. IRM 5.14.5.4 says that determination is not required only when all of these are true: the unpaid balance is $25,000 or less, the business qualifies for and is granted the Simple Payment Plan (Business Trust Fund), the entire liability will be paid in full by the collection statute date, and the plan is granted within 120 calendar days of the case being assigned in the IRS field system. If a penalty was recommended or assessed before the plan was granted, the case history documents whether collection of it will continue or be deferred.

That 120-day window is a reason for a business with a qualifying balance to move quickly once a revenue officer is assigned.

Above $25,000 in trust fund taxes: the in-business agreement

Balances above the trust fund threshold go to the in-business trust fund installment agreement procedures in IRM 5.14.7. Those agreements require a collection information statement, typically Form 433-B, managerial approval, a lien filing determination and a trust fund penalty determination where applicable. IRM Exhibit 5.14.1-5 notes that verification of the financial statement is not required for in-business agreements of up to $25,000 that pay in full within 60 months.

The core test is stated in IRM 5.14.7.2: if the business cannot pay operating expenses and current taxes, deferring action on old taxes may serve no useful purpose, and enforcement or the trust fund penalty should be considered. If the business can pay current taxes and operating expenses and also make payments on the delinquent taxes, an agreement can be considered.

Businesses identified as repeaters, those that keep accruing new payroll liabilities, may not be granted agreements immediately. The IRM says their requests are treated as pending if they are maintaining current federal tax deposit compliance, and once they stop accruing new liabilities and file all returns, they may qualify.

Rules that work differently for businesses

• No online application. The IRS online payment agreement page says business accounts cannot apply online and must call 800-829-4933 or the number on the notice. That also means the cheaper online user fees are not available; see installment agreement user fees.
• No six-year rule. IRM 5.14.1.4.1 says the six-year and one-year rules do not apply to corporations, partnerships, LLCs where the LLC is the liable taxpayer, or any business expenses.
• No quarter-percent penalty for entities. The reduced failure-to-pay rate in IRC 6651(h) applies to individuals. A corporation keeps paying the standard rate.
• Higher interest for large corporate balances. For the fourth quarter of 2026, the IRS set the rate on large corporate underpayments, over $100,000, at 9 percent, against 7 percent for other underpayments.
• Related entities can share a plan. IRM 5.14.4.3 allows a sole proprietorship and its owner's individual taxes, or two S corporations with the same sole officer, to be combined in one agreement.

LLCs: who is the taxpayer?

For a limited liability company, the first question is which taxpayer owes. IRM 5.14.7.3 explains that the LLC is the liable taxpayer for income and excise taxes assessed in its name, and for employment taxes on wages paid on or after January 1, 2009, regardless of the number of members. For some older employment tax periods of single-member LLCs, the owner may be the liable taxpayer. When the LLC is liable, the agreement is based on the LLC's ability to pay; when the owner is liable, on the owner's. Getting this right matters, because a default on one taxpayer's agreement should not be caused by the other taxpayer's new balance.

The foundation: current deposits

Every business plan rests on the same foundation. Make this quarter's deposits. File this quarter's returns. A business that is current going forward can almost always find a plan for the past. A business that is still falling behind will be offered enforcement instead.

If the business has closed, the path changes. The Form 9465 instructions, revised July 2024, list individuals who owe employment taxes for a sole proprietorship that is no longer operating among those who can use Form 9465, and out-of-business sole proprietors fall in the $50,000 Simple Payment Plan category. A closed corporation is a different matter, and the trust fund penalty question for its officers usually becomes the main event.

If your business owes, start by getting current, then measure the balance against the $25,000 and $50,000 lines, and then call. For the payroll side of business tax debt more broadly, my firm's main site has an overview of payroll tax problems.