Express and Verified Installment Agreements for Payroll Taxes

Monthly Payment Plans for Businesses That Owe Payroll Taxes

The In-Business Express Installment Agreement gives in-operation businesses up to 24 months to repay up to $25,000 in payroll taxes or other trust fund tax debt. However, as of 2024, this option has effectively been replaced by the Simple Payment Plan for businesses, which gives you more time to pay and more leniency on the terms of the agreement. This post explains the traditional terms of the express option and compares it to the new Simple Payment Plan. Then, it outlines what to consider if your business doesn't qualify for these options. 

Keep reading to learn more, or use TaxCure to find a tax pro experienced with business tax problems today.

Key takeaways

• Express installment agreements - 24-month payment plans for in-operation businesses owing $25,000 or less in payroll tax. Effectively replaced by the Simple Payment Plan in 2026.
• Non-express installment agreements - Requires a financial disclosure, available to businesses that owe more than $25,000 in trust fund taxes.
• How to apply - Apply for express installment agreements online or apply for a Simple Payment Plan or a financially verified payment plan over the phone. 

In-Business Express Installment Agreements

The IRS offers Express Installment Agreements to in-operation businesses that need to make monthly payments on their payroll taxes or other trust fund taxes, like excise taxes. To qualify, your business must meet the following criteria: 

• Owe $25,000 or less in trust fund taxes - If you owe over this amount, you can qualify if you make a payment to bring the tax debt under the threshold before you apply.
• Able to pay the balance within 24 months - Your monthly payments must pay off the balance in 24 months or less, or by the Collection Expiration Date if sooner. 
• Direct debit payments - If you owe over $10,000, you must set up payments via direct debit from your bank account. 
• Compliance - You must be up to date with all payroll tax returns and make all required tax payments while you're on the installment agreement. Failure to pay or file taxes can put your agreement into default.

Here's a breakdown of the differences between the Simple and Express payment plans for business trust fund taxes. 

Feature	Express Installment Agreement	Simple Payment Plan
Level of tax debt	Up to $25,000 in trust fund taxes (payroll or excise)	Up to $25,000 in trust fund taxes or up to $50,000 in business tax
Payment term	Up to 24 months (or collection expiration date if sooner)	Up to 120 months (or collection expiration date if sooner)
Available to closed businesses?	No	Yes
Requires financial disclosure?	No	No
Compliance requirements?	Up to date on returns; can only include taxes from the last two years	Up to date on returns, no rules on the age of tax debt
Application process?	Online, phone, or mail	Phone or mail
Direct debit?	Required if you owe over $10,000	Not required

How to apply

The fastest option is to apply online. Alternatively, you can call the IRS at (800) 829-4933 or use the phone number on the last notice you received. 

Will the IRS file a tax lien if you're on an Express Installment Agreement?

Generally, the IRS will not file a tax lien if you set up a payment plan on your payroll taxes. However, the agency may decide to file a tax lien if you have defaulted on a payment plan in the last year or the prior year or if you have a history of pyramiding payroll taxes (also called an in-business repeater). This rule also applies to Simple Payment Plans. 

Will the IRS assess a Trust Fund Recovery Penalty if I set up payments on my payroll taxes?

No, the IRS will not assess a Trust Fund Recovery Penalty if you get approved for an In-Business Trust Fund Express Installment Agreement. Generally, the IRS will not assess the TRFP if you owe $25,000 or less and the taxes are from the current year or the prior calendar year. 

If the IRS assesses the TRFP before you get approved for an Express Agreement, the agency may continue to pursue the penalty, or they may decide to put it in deferral status while you make payments. Then, if you default on the payment plan, the IRS will revisit whether or not to assess this penalty. 

What if you default on your payment plan?

If you miss a payment or incur new payroll tax debt, you default on your installment agreement. However, the IRS will immediately reinstate the agreement or let you set up a new one if the following are true:

• You owe less than $10,000
• You can still pay off the tax debt by the collection expiration date. 

For example, say that you miss a monthly payment and the IRS sends you a notice saying that your payment plan went into default. As long as you make the payment within 30 days, the IRS will generally let you stay on your existing arrangement. 

Here's another example. Imagine you're making payments on an IBTF Express agreement. You owe $5,000. You file a payroll tax return that you can't afford to pay, showing $4,000 due. You are in default of your current agreement, but because the total due is less than $10,000, the IRS will generally let you set up a new arrangement as long as the monthly payments are high enough to pay off the tax liability within two years or by the CSED. Note, however, that in cases where you default multiple times, the agency may deny your request to make payments, or they may require additional financial information before approving payments.

All of these terms may be more lenient under a Simple Payment Plan -- simply because it has a longer term and more flexibility on direct debit requirements. 

Options for Businesses That Don't Qualify for Express IAs 

If your business doesn't qualify for an Express Installment Agreement, you may still be able to set up payments on your back taxes, but you must contact the IRS directly. Call (800) 829-4933 or talk with the Revenue Officer assigned to your case. If desired, you can have a tax professional contact the IRS on your behalf. Here are the options depending on the reason you don't qualify:

• Owe more than $25,000 -- make a payment to get your balance under $25,000 and then apply. Or provide a financial statement to request a "financially verified" or non-streamlined payment plan.  The IRS will require you to file Form 433-B before approving payments on your account.
• Owe more than $25,000 but not all is trust fund taxes -- pay the trust fund taxes first. If you only owe non-trust fund taxes, you can set up a simple payment plan on up to $50,000 in tax debt. 
• Need more than two years to pay -- apply for a simple payment plan if you owe up to $25,000 in trust fund taxes or up to $50,000 in general business tax. That gives you up to 10 years to pay.
• Have a history of default -- appeal the rejection and work with a tax professional to improve your chances of approval. If you can't get approved, consider alternatives like taking out a business loan. 

What if I can't afford payroll taxes and operating expenses?

If the IRS sees that you cannot afford to pay your taxes and operating expenses, they may deny your payment plan request. Then, they may move forward with the collection process and start going after your assets. The IRS has the power to take business assets in a way that may shut down your business. 

Trust Fund Recovery Penalty on Payment Plans for Trust Fund Taxes

Generally, the IRS does not assess a TRFP when you set up an express agreement. If you can pay off the tax liability by the Assessment Statute Expiration Date (ASED), the IRS generally will not assess the TRFP. The ASED is generally three years after April 15th, following the calendar year in which the payroll returns were filed. For example, payroll returns for Q1, Q2, Q3, and Q4 2025 have an ASED of April 15, 2029. 

If you're applying for a payment plan that goes beyond the original ASED, the IRS may ask you to sign a waiver extending the ASED to one year after the projected end date of your installment agreement. Typically, if you sign the waiver, the IRS will not assess the TRFP. Note that you should always consult with a tax pro before signing this type of agreement. 

If you are unable to pay off the tax within one year after the ASED and you refuse to extend the ASED, the IRS may assess the TFRP. In this situation, the IRS will gather all of the information required to assess this penalty. In particular, they will identify responsible individuals (potentially including certain employees), request a TFRP liability interview, and ask for Form 433-A from them. Then, the agency will again ask these individuals to sign the waiver extending the assessment, and if they refuse, the IRS will assess the penalty. 

Additionally, if the IRS sees that a responsible individual has enough money or assets to make a payment, the agency will ask them to pay down the trust fund portion of the tax bill. If the individual refuses to make the payment, the IRS may assess the TFRP and file a lien against the individual. Then, if the individual still doesn't make a payment, the IRS may pursue other collection actions. Note that this can happen even if the business is on a payment plan. 

However, this practice may change as more business owners turn to the Simple Payment Plan, rather than the Express Agreement. The IRS has said that it will not require a TFRP assessment with Simple Payment Plans, but it has not expressly stated if businesses will need to extend the ASED to make that happen. 

What if You're No Longer in Business?

The Express Installment Agreement was specifically designed for in-operation businesses. If you're no longer in business and you're a sole prop, you may qualify for a Simple Payment Plan on up to $50,000 in taxes, including trust fund taxes. Other entities that are no longer operating may get approved on a case-by-case basis. 

Benefits of Setting Up Payments on Payroll Taxes

Being proactive about tax debt helps to protect you and your business from unwanted consequences. Here are just some of the benefits of setting up monthly payments on your payroll taxes:

• Reduced exposure to the Trust Fund Recovery Penalty - As explained above, if you set up payments promptly and owe under $25k, you will generally not incur the TFRP. 
• Predictable monthly payments - The payments will be the same amount every month, making them easy to budget for. 
• Direct debit option - You can set up direct debits on the day of your choice (from the 1st to the 28th) so that you don't have to worry about missing a payment. 
• Possible lien avoidance - If you qualify for an express agreement or a simple payment plan and set it up promptly, the IRS generally will not file a tax lien. 
• No collection actions - Once you secure a payment plan on your payroll taxes, the IRS will not take any collection actions against your business. Even if they file a tax lien, they will not seize assets or take other collection measures. 

FAQs for Payroll Tax Installment Agreements

How long does the IRS take to review installment agreement requests?

Typically, as long as you meet all of the conditions, the IRS will give you a response in 30 to 60 days. If applying online for an express installment agreement, you may get approval when you complete the application. 

Can the IRS revoke the agreement?

Yes, if the business misses future payroll tax deposits, the IRS will assess a failure to deposit penalty and put the payment plan into default. The IRS will also default the arrangement if you miss a monthly payment. In both cases, you may be able to reinstate the payment plan, but if you have multiple issues or incur excessive tax debt, the IRS may revoke the agreement and pursue involuntary collections. 

Can I negotiate lower monthly payments?

If you cannot afford the minimum payment on an express agreement, you can request lower monthly payments by calling the IRS and requesting a Simple Payment Plan. The Simple option typically has lower monthly payments because it spreads the debt over a longer time frame. 

What if I incur payroll taxes due to misclassifying an employee?

You may be able to set up an installment agreement on those back taxes and penalties if you meet the criteria discussed above. 

How to Get Help Setting Up Payments on Payroll Taxes

To get help now, use TaxCure to find a tax professional. Start your search anywhere on the site, and note which agencies you need help with - if you're also dealing with state payroll tax debt, select your state in addition to the IRS. Then, when you're on the results page, you can further narrow down results by using the filters on the left side of the page. For example, if you're already facing the TFRP or asset seizure, you can filter for tax pros who have experience with those concerns. Then, review the list of options, and to find the right pro for you, set up a consultation.