Express and Verified Installment Agreements for Payroll Taxes

Monthly Payment Plans for Businesses That Owe Payroll Taxes

If your business owes $25,000 or less in payroll taxes, you may qualify for an Express Installment Agreement. These monthly payment plans give you up to 24 months to pay off your tax debt, and you don't have to provide any financial details. 

The IRS may also approve payment plans on higher levels of payroll tax debt or for longer periods, but in this situation, the agency will require financial disclosures and take a much closer look at your finances. 

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 businesses owing $25,000 or less in payroll tax. 
• Non-express installment agreements - Requires a financial disclosure, available to businesses that owe more than $25,000 or need longer than 24 months to pay.
• How to apply - Apply for express installment agreements online or over the phone. Call to apply if you don't qualify for an express agreement. 

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. To qualify, your business must meet the following criteria: 

• Owe $25,000 or less - If you owe over this amount, you can qualify if you make a payment to bring the tax debt under the threshold.
• 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.

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 that last year or the prior year or if you have a history of pyramiding payroll taxes (also called an in-business repeater). 

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.

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 bank 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. 

If you owe over $25,000 or need more than two years to pay, the IRS will require you to file Form 433-B before approving payments on your account. Form 433-B asks for detailed information about your business, revenue, expenses, assets, and debts. If the IRS reviews this form and believes that you can pay your tax debt in full, they may not accept your request to make payments. 

In some cases, the IRS may not be willing to accept payments if you are still in business. Keep reading for more details on setting up payments when you don't qualify for the express option. 

What if you need more than two years to pay?

If you need more than two years to pay regardless of how much you owe, you will have to file Form 433-B when you apply for a payment plan on your payroll taxes. If you have significant business assets, the IRS may deny your request for payments and recommend that you sell assets or borrow against them to pay your taxes. 

Generally, however, as long as you can pay off the liability in five years and have a history of compliance, the IRS will approve your payment plan request, and they will not verify the details reported on Form 433-B. 

What if your business owes more than $25,000?

If you owe more than $25,000, you will need to file Form 433-B when requesting a payment plan on payroll taxes. When you owe over $25,000, the IRS will verify the information on your Form 433-B. They may require bank statements or other financial records, but they may also check ownership records to ensure that you're reporting all of the assets your business owns. 

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 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 Non-Express Installment Agreements 

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 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 will 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. 

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 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, but the agency will require a financial disclosure. The minimum payment on an express agreement is roughly the tax debt divided by 24, but you should round up slightly to cover interest. 

Can I include income taxes or personal taxes?

No, these payment plans are exclusively for payroll taxes and federal unemployment taxes. There are different requirements for personal and corporate income taxes. 

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.