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As a business owner, you face many things that demand your attention. But the one that causes anxiety is the IRS notice. Say you owe $78,000 in business taxes from 2024. Your cash flow is tight after a difficult year, and you can't pay the full amount. The notice warns of collection actions—liens, levies, bank account seizures—if payment isn't received within 30 days. You panic, considering liquidating retirement accounts or taking high-interest loans to pay the IRS immediately. Wrong.
Someone tells you to qualify for an IRS installment agreement and that it allows you to pay the $78,000 over 72 months at approximately $1,080 per month. It prevents collection actions, reduces penalties from 0.5% to 0.25% per month while you're making payments, and lets you keep your business operating without devastating your cash flow.
Understanding IRS payment plan options determines whether you can set up streamlined agreements online for balances under $50,000 without financial disclosure, when you need standard installment agreements requiring detailed financial information, how partial payment agreements work when you can't afford to pay the full amount, and the costs, fees, and terms for different agreement types.
Here's everything you must know about what IRS streamlined installment agreement is and how to qualify for simplified approval, when standard installment agreements requiring financial disclosure are necessary.
Types of IRS installment agreements for businesses
The IRS offers several types of IRS payment plan options depending on the amount owed, type of tax debt, and your ability to pay.
Short-term payment plans (180 days or less)
If you can pay your full tax debt within 180 days, you can request a short-term IRS payment plan. These plans have no setup fees and allow you to pay in full over up to 6 months.
Eligibility: Total tax, penalties, and interest owed is $100,000 or less.
Setup: Can be established online, by phone, or by mail. No financial disclosure required.
Fees: None. Short-term plans have no setup fee or monthly user fees.
Term: Up to 180 days from the date of the agreement.
Example: You owe $28,000 in business taxes. You can pay $5,000 per month for 6 months. Request a short-term IRS payment plan online, make 6 monthly payments, and you're done with no fees.
Short-term plans are ideal when you have temporary cash flow issues but can resolve the debt quickly.
Streamlined installment agreements
IRS streamlined installment agreement: For individuals and many small businesses, streamlined installment agreements are long-term payment plans (generally up to 72 months) available when the total balance due is $50,000 or less, and they typically do not require detailed financial disclosure. However, the IRS may request a collection information statement such as Form 433-B for certain business entities or more complex cases.
Eligibility: You owe $50,000 or less in combined tax, penalties, and interest.
Setup: Can be established online through the IRS payment plan online portal, by phone, or by mail using Form 9465.
Financial disclosure: None required. The IRS doesn't require you to submit financial statements, bank statements, or proof of income/expenses.
Term: Up to 72 months (6 years).
Monthly payment: Divide the total amount owed by 72 months (or fewer months if you want to pay faster). The IRS requires the balance be paid in full within the agreement term.
Example: You owe $45,000. Divide by 72 months = $625 per month minimum. You can agree to pay $625 or more monthly, and the IRS will approve the IRS streamlined installment agreement without reviewing your finances.
Fees: (Check latest IRS regulation)
- Online setup: $22 (lowest cost option with direct debit for 2025)
- By phone or mail with direct debit: $107
- By phone or mail with non-direct debit: $178
- Low-income waiver available reducing fees to $43 for qualifying taxpayers
Standard installment agreements
Standard agreements are for tax debts over $50,000 or when you need more than 72 months to pay. These require full financial disclosure.
Eligibility: You owe more than $50,000, or need more than 72 months to pay, or want monthly payments lower than the streamlined amount.
Setup: Cannot be done online for balances over $50,000. You must call the IRS or submit Form 9465 with Form 433-F (Collection Information Statement) showing detailed financial information.
Financial disclosure required: You must provide:
- Form 433-F (Collection Information Statement for Wage Earners and Self-Employed Individuals) or Form 433-B (for businesses)
- Bank statements for all accounts (last 3 months)
- Proof of income (pay stubs, profit and loss statements)
- List of assets (real estate, vehicles, investments)
- List of monthly expenses
The IRS analyzes your financial information to determine what you can afford to pay monthly.
Term: Generally up to 72 months, but can be longer in some cases.
Monthly payment: Based on IRS analysis of your income, expenses, and assets. The IRS calculates your "ability to pay" and sets a monthly payment accordingly.
Example: You owe $125,000. The IRS reviews your financial disclosure and determines you can afford $2,000 monthly based on your business income and allowable expenses. They approve a 72-month IRS installment agreement at $2,000 per month (paying $144,000 total over 72 months, including interest and penalties that continue accruing).
Fees: Same as streamlined agreements ($22 online with direct debit if available for your situation, $107-$178 otherwise).
Partial payment installment agreements (PPIAs)
Partial payment agreements allow you to pay less than the full amount owed when you can prove inability to pay the full balance before the collection statute expires.
Eligibility: You owe taxes but cannot afford to pay the full amount within the collection statute expiration date (generally 10 years from assessment).
Setup: Submit Form 9465 and Form 433-F (or Form 433-B for businesses) with complete financial disclosure.
Financial disclosure required: Extensive. You must prove you cannot afford standard payment amounts through detailed documentation of income, expenses, assets, and equity.
How it works: The IRS calculates what you can afford to pay monthly based on allowable income and expenses. You make monthly payments of this amount. At the end of the collection statute (10 years from assessment), any remaining balance is written off.
Example: You owe $200,000 but your business barely breaks even. The IRS determines you can afford $400 monthly. You make $400 monthly payments for 8 years (the remaining collection statute period). You pay $38,400 total. The remaining $161,600 balance is written off when the statute expires.
Review requirement: PPIAs are reviewed every 2 years. You must submit updated financial information. If your financial situation improves, the IRS may increase your monthly payment or require full payment.
Fees: Same setup fees as standard agreements.
Important limitation: PPIAs are difficult to obtain. The IRS scrutinizes financial information closely and may reject the request if they believe you can pay more or liquidate assets.
In-Business Trust Fund Express Installment Agreement
This is a special IRS streamlined installment agreement specifically for employment tax (payroll tax) debts under $25,000.
Eligibility:
- You owe $25,000 or less in employment taxes (Form 941)
- Your business is still operating (in-business)
- You're current with all tax filings and current tax deposits
Setup: Can be established online or by phone.
Financial disclosure: None required (streamlined).
Term: Up to 24 months (2 years), not the 72 months available for income tax debts.
Monthly payment: Total balance divided by 24 months.
Example: You owe $18,000 in payroll taxes. You must pay $750 per month for 24 months. The shorter term reflects the IRS's policy that employment taxes (taxes withheld from employees) must be paid faster than income taxes.
Streamlined installment agreements: The easiest option
For most small businesses owing less than $50,000, IRS streamlined installment agreement plans are the best option because they're fast, easy, and require no financial disclosure.
Eligibility requirements
Balance limit: Combined tax, penalties, and interest total $50,000 or less.
Filing compliance: All required tax returns must be filed. The IRS won't grant an IRS installment agreement while returns are missing.
Current obligations: You must be current with all current-year tax deposits and filings. For example, if you're requesting an agreement for 2023 taxes, your 2024 and 2025 quarterly estimated taxes or payroll deposits must be current.
No other installment agreements: The IRS generally does not maintain multiple separate installment agreements for the same taxpayer at the same time. If you already have an active agreement and new tax debt arises, the IRS will usually consolidate the existing agreement and the new balance into a single, updated installment agreement rather than allowing a completely separate plan.
How to set up a streamlined agreement online
The fastest and cheapest way to establish an IRS streamlined installment agreement is through the IRS payment plan online portal:
Step 1: Go to irs.gov and search for "Online Payment Agreement."
Step 2: Have ready:
- Your Social Security number or EIN
- Filing status
- Tax return information from your most recent return
Step 3: Answer questions about:
- Amount you owe (the system will show your balance)
- Monthly payment amount you're proposing
- Payment start date
- How you'll make payments (direct debit from bank account or debit/credit card)
Step 4: Review and agree to terms:
- You must file all future returns on time
- You must pay all future taxes in full when due
- Agreement defaults if you miss payments or fail to file/pay future obligations
- Interest and penalties continue accruing during the agreement
Step 5: Pay the $22 setup fee (lowest cost option for online direct debit agreements in 2025).
Step 6: Receive immediate confirmation. You can start making payments according to the agreed schedule.
The entire process takes 10-15 minutes and you have an approved IRS payment plan online immediately.
Direct debit is required for lowest fees
The $22 setup fee applies only when you agree to make payments through direct debit (automatic bank withdrawals). If you want to mail checks or make manual payments, the fee increases to $178.
Benefits of direct debit:
- Lowest setup fee ($22 vs $178)
- Automatic payments—you won't miss due dates
- Lower monthly user fee
Monthly payment calculation
For IRS streamlined installment agreement plans, you determine the monthly payment by dividing the total amount owed by the number of months in your payment term (up to 72 months).
Minimum payment: The balance must be paid in full within 72 months. Calculate minimum payment as: Total owed ÷ 72 = minimum monthly payment.
Example: You owe $36,000. Minimum monthly payment: $36,000 ÷ 72 = $500. You can agree to pay $500 or more per month. Higher payments reduce the term and total interest paid.
Strategic tip: If you can afford higher payments, propose a larger monthly amount. This reduces the term, reduces total interest paid, and gets you out of debt faster.
Interest and penalties continue accruing
While you're making installment payments, interest and the failure-to-pay penalty continue accruing on the unpaid balance.
Interest: Compounds daily at the current IRS rate (approximately 8% annually as of 2025).
Failure-to-pay penalty: Continues at 0.5% per month but is reduced to 0.25% per month while the IRS installment agreement is in effect and you're making required payments.
Example: You owe $40,000 and set up a 60-month IRS payment plan at $750 per month. Over 60 months, you'll pay approximately $5,000-$7,000 in additional interest and reduced penalties, bringing the total paid to $45,000-$47,000.
The sooner you pay off the balance, the less interest and penalties you pay.
Standard installment agreements: When financial disclosure is required
If you owe more than $50,000 or need more than 72 months to pay, you must apply for a standard IRS installment agreement with full financial disclosure.
When standard agreements are required
Balance exceeds $50,000: If you owe more than $50,000 in combined tax, penalties, and interest.
Need more than 72 months: If you can't afford to pay the full balance within 72 months even at minimum payments.
Want lower payments than streamlined allows: If the streamlined monthly payment is too high but you owe less than $50,000, you can request a standard agreement with lower payments based on financial hardship.
Mixed tax types: If you owe both income taxes and payroll taxes, or have complex situations with multiple tax periods, standard agreements may be required.
Required financial disclosure forms
Form 433-F (Collection Information Statement for Wage Earners and Self-Employed Individuals): Used for individuals operating sole proprietorships or single-member LLCs.
Form 433-B (Collection Information Statement for Businesses): Used for corporations, partnerships, and multi-member LLCs.
These forms require detailed information:
- All sources of income (wages, business income, rental income, investment income)
- Monthly living expenses (IRS has allowable expense standards limiting certain expenses)
- Bank accounts (all accounts with current balances)
- Investments and retirement accounts
- Real property (homes, rental properties)
- Personal property (vehicles, equipment)
- Business assets
- Monthly business expenses
Supporting documentation required
You must attach documentation proving the information on Form 433-F or 433-B:
Income documentation:
- Pay stubs for last 3 months (if employed)
- Profit and loss statements (if self-employed)
- Bank statements showing deposits
Expense documentation:
- Bank statements for last 3 months
- Utility bills
- Mortgage/rent statements
- Insurance statements
- Business expense invoices
Asset documentation:
- Real estate appraisals or recent tax assessments
- Vehicle loan statements
- Investment account statements
IRS analysis of ability to pay
The IRS reviews your financial information and calculates your "ability to pay" using this formula:
Monthly disposable income = Total monthly income - Allowable monthly expenses
The IRS uses standardized expense allowances for certain categories (food, clothing, housing, transportation). If your actual expenses exceed allowable standards, the IRS may disallow the excess.
Example: You report $2,500 monthly food expenses for a family of four. The IRS allowable food expense is $1,200. The IRS will only allow $1,200, increasing your calculated disposable income by $1,300.
Your monthly payment will be set at your calculated monthly disposable income, or the amount needed to pay the full balance within 72 months, whichever is higher.
How long standard agreements take to process
Standard IRS installment agreement requests with financial disclosure take 30-90 days to process. During this time, the IRS may request additional documentation or clarification.
While your request is pending, collection enforcement is generally suspended, but interest and penalties continue accruing.
Partial payment installment agreements (PPIAs): When you can't pay in full
Partial payment agreements are for businesses and individuals who genuinely cannot pay their full tax debt before the collection statute expires.
How PPIAs differ from standard agreements
Standard installment agreement: You pay the full balance over time (72 months or less). The IRS expects full payment of tax, penalties, and interest.
Partial payment installment agreement: You pay what you can afford monthly, and the remaining balance is written off when the collection statute expires (generally 10 years from assessment). You pay less than the full amount owed.
Eligibility for partial payment agreements
To qualify for a PPIA, you must demonstrate:
- Inability to pay in full: Your monthly disposable income (calculated by IRS standards) multiplied by the remaining collection statute period is less than the total amount owed.
- Limited asset equity: You don't have significant equity in assets that could be liquidated to pay the debt.
- Financial hardship: Paying the full amount would create financial hardship preventing you from meeting basic living expenses.
Example: PPIA qualification
You owe $180,000 in business taxes assessed in 2022. The collection statute expires in 2032 (10 years from assessment). You have 7 years remaining.
Your financial disclosure shows monthly disposable income of $600 (after allowable expenses).
$600 per month × 84 months (7 years remaining) = $50,400 total you could pay before the statute expires.
Since $50,400 < $180,000 owed, you may qualify for a PPIA paying $600 monthly for 84 months, with the remaining $129,600 written off when the statute expires.
PPIA review every 2 years
The IRS reviews PPIAs every 24 months. You must submit updated financial information (Form 433-F or 433-B with supporting documentation).
If your financial situation improves, the IRS may:
- Increase your monthly payment
- Convert the PPIA to a standard IRS installment agreement requiring full payment
- Terminate the agreement and demand payment in full
If your financial situation worsens, the IRS may reduce your monthly payment.
Assets and equity in PPIA qualification
The IRS will consider whether you have assets with equity that could be liquidated to pay the debt. If you have significant equity in real estate, vehicles, or other assets, the IRS may deny the PPIA and require you to liquidate assets or borrow against equity.
Example of denial: You request a PPIA claiming inability to pay. You own a home with $200,000 in equity (value minus mortgage). The IRS determines you could refinance the home to access equity and pay the tax debt. PPIA request is denied.
PPIAs are harder to obtain than standard agreements
The IRS scrutinizes PPIA requests closely because they result in the IRS collecting less than the full amount owed. Approval rates for PPIAs are lower than standard installment agreements. Many PPIA requests are denied, with the IRS offering a standard IRS installment agreement instead.
Fees for IRS installment agreements
The IRS charges setup fees for long-term IRS payment plan options (over 180 days).
Setup fees (2025 rates)
- Online direct debit agreement: $22 (lowest cost)
- Direct debit agreement by phone or mail: $107
- Non-direct debit agreement (paying by check, money order, or credit/debit card): $178
- Low-income waiver: $43 if you qualify as low-income (adjusted gross income at or below 250% of federal poverty guidelines)
- Reimbursement for low-income: If you paid the setup fee but later qualify for low-income status, you can request reimbursement of the fee.
Lowest-cost option
To minimize costs when setting up an IRS payment plan online:
- Apply online (not by phone or mail): Saves $85-$156 in setup fees
- Agree to direct debit: Saves $156 in setup fees
- Check for low-income waiver eligibility: Reduces fee to $43 or eliminates fees
Total cost comparison for 60-month agreement:
- Online with direct debit: $22 total
- Phone/mail with direct debit: $107 total
- Phone/mail with non-direct debit: $178 setup plus potential per-transaction fees
Requirements while installment agreement is active
Once you have an IRS payment plan, you must meet ongoing requirements or the agreement will default.
Make all scheduled payments on time
Missing even one payment can cause the agreement to default. The IRS may terminate the IRS installment agreement and begin collection enforcement after a single missed payment.
Consequence of default: The IRS can seize assets, levy bank accounts, and garnish income after terminating the agreement.
Reinstatement: If you default, you can request reinstatement of the agreement, but you must pay a reinstatement fee ($89) and explain why you missed payments.
File all future returns on time
You must file all required tax returns by their due dates (including extensions) while the IRS installment agreement is active.
Example: You have an IRS installment agreement for 2023 taxes. Your 2024 and 2025 returns must be filed on time, or the agreement defaults.
Pay all current taxes in full when due
You must pay all current-year taxes in full and on time. This includes:
- Quarterly estimated tax payments (if self-employed)
- Payroll tax deposits (if you have employees)
- Annual tax liabilities shown on filed returns
Example: You have an IRS payment plan paying off 2023 taxes. When you file your 2024 return showing $8,000 owed, you must pay the $8,000 in full by the return due date. You cannot add it to the existing installment agreement.
The IRS installment agreement applies only to the specific tax years included in the agreement. New tax debts must be paid separately.
Update your address
If you move, notify the IRS of your new address using Form 8822 (individuals) or Form 8822-B (businesses). Failure to receive IRS notices due to wrong address doesn't excuse defaults.
Common mistakes with installment agreements
Mistake #1: Not setting up the agreement soon enough
Many businesses wait until receiving final notices or facing levy actions before requesting installment agreements. Request an IRS payment plan online as soon as you know you can't pay in full by the due date. Early action prevents collection enforcement.
Mistake #2: Proposing unrealistic payment amounts
Some taxpayers propose payment amounts they can't sustain, hoping to avoid financial disclosure. If you default within a few months, the IRS will be less likely to grant another agreement. Propose sustainable payments you can maintain throughout the term.
Mistake #3: Not making payments while waiting for approval
If you submit a standard IRS installment agreement request and it takes 60 days to process, make voluntary payments during the 60 days. This shows good faith and reduces the balance. Waiting without making any payments makes the IRS question your commitment.
Mistake #4: Adding new tax debts to an existing agreement
You cannot simply add new tax debts to an existing IRS installment agreement. When you incur new tax debts while an agreement is active, you must pay them separately and in full. If you can't, the existing agreement defaults and you must renegotiate including all tax years.
Mistake #5: Using short-term payment plans when streamlined agreements would be better
If you owe $45,000 and can't pay it off in 180 days, don't request a short-term irs payment plan that you'll default on. Request an IRS streamlined installment agreement for up to 72 months from the start.
Mistake #6: Not considering offer in compromise as an alternative
If you truly cannot pay your tax debt and can prove extreme financial hardship, an offer in compromise (settling for less than owed) might be better than a PPIA. Offers provide finality—once paid, you're done. PPIAs continue for years and are reviewed periodically.
How NSKT Global can help with IRS installment agreements
NSKT Global specializes in negotiating IRS payment plan options for businesses, helping clients obtain installment agreements with affordable monthly payments while preventing collection enforcement.
We offer comprehensive installment agreement services including agreement type analysis determining whether IRS streamlined installment agreement, standard, or partial payment agreements best fit your situation and ability to pay, financial disclosure preparation completing Forms 433-F and 433-B with supporting documentation to demonstrate financial position, payment negotiation advocating for lower monthly payments based on allowable IRS expense standards, and IRS payment plan online setup assistance establishing streamlined agreements through the IRS portal with lowest setup fees.
Whether you owe less than $50,000 and need quick setup of an IRS streamlined installment agreement online, owe more than $50,000 requiring detailed financial disclosure and negotiation. Our expertise ensures you obtain installment agreements with affordable monthly payments preventing collection enforcement, minimize setup fees and interest costs through strategic agreement structuring. We properly complete financial disclosure forms maximizing allowable expenses to reduce required payments, and maintain compliance with all agreement terms preventing defaults that restart collection actions.
