An individual who owes the IRS can sometimes wait out a bad year. A business usually cannot. Payroll is due Friday, suppliers want to be paid, and an IRS levy on receivables or federal payments can shut the doors faster than any audit. The goal for an operating business is a resolution that stops enforced collection and still leaves the business able to run.
Here is how that works, using the IRS's current procedures.
First: stop the bleeding
Every option below depends on one thing. The IRS's payment plan procedures, IRM 5.14.5 (revised July 21, 2026), say that before granting an agreement, taxpayers must establish filing and payment compliance. Business taxpayers with employees must file all required returns and be current with applicable payment requirements, such as federal tax deposits.
In plain terms: you cannot negotiate the old balance while you are still creating a new one. Get the current quarter's deposits made, get missing returns filed, and only then make the call. A business that keeps falling behind on deposits while asking for a payment plan is the business the IRM tells revenue officers to evaluate as a request "solely to delay."
Simple Payment Plans: the new names for the fast agreements
The 2026 revision of IRM 5.14.5 renamed and reorganized the streamlined agreements that do not require a full financial statement.
Simple Payment Plans (up to $50,000)
Under IRM 5.14.5.2, a Simple Payment Plan may be granted when the aggregate unpaid balance of assessment is $50,000 or less, and the payments will fully pay all balances, including accrued penalties and interest, by the collection statute expiration date. It is available for individual accounts, out-of-business sole proprietors, and business non-trust fund liabilities, such as corporate income tax or employment tax where the trust fund portion has already been paid. A collection information statement is not required, a direct debit is not required, and a lien filing determination is not required, although a revenue officer can still file a lien with documented justification.
The IRM encourages taxpayers who owe more than $50,000 to pay the balance down to qualify.
Simple Payment Plans (Business Trust Fund) (up to $25,000)
Trust fund taxes, the income tax and employee FICA withheld from paychecks, get a separate track. Under IRM 5.14.5.4, a Simple Payment Plan (Business Trust Fund) may be granted when the unpaid balance of assessment is $25,000 or less. No financial statement is required, but banking and accounts receivable information must be documented, and filing and payment compliance must be verified. A lump sum cannot be used as the first installment to get under $25,000, though you may pay the balance down before the agreement is granted.
Two limits matter. The IRM says this plan may not be granted when the request is made in conjunction with a request for levy release, or when the case meets "solely to delay" criteria. And trust fund balances raise the trust fund recovery penalty question for the people responsible for paying the tax over. The IRM says a TFRP determination is not required only when the balance is $25,000 or less, the plan is granted and will full pay by the collection statute date, and the plan is granted within 120 calendar days of case assignment. The firm's payroll tax page covers that exposure.
Larger balances: installment agreements with financials
Above those thresholds, or when the payment does not fit, the IRS will want a collection information statement, generally Form 433-B for the business and possibly Form 433-A for owners. The agreement is authorized by IRC 6159. The financial statement drives the payment amount, so prepare it carefully: real receivables aging, real equipment values, real monthly cash flow.
The IRS's payment plan page says business taxpayers should call the number on their notice or 800-829-4933, or visit a Taxpayer Assistance Center, and that interest and some penalties continue to accrue until the balance is paid. As of October 2026, it lists setup fees for long-term plans established by phone, mail or in person of $107 for direct debit and $178 for other payment methods.
What an agreement does for you
- No levy while it is pending or in effect. IRC 6331(k)(2) bars levy while an installment agreement request is pending, while an agreement is in effect, and for 30 days after rejection or termination (longer during an appeal).
- Release of existing levies. Treas. Reg. 301.6343-1(b)(3) requires release of a levy when the taxpayer enters into an installment agreement, unless the agreement provides otherwise or release would jeopardize the government's secured position.
- Possible lien withdrawal. IRC 6323(j)(1)(B) allows the IRS to withdraw a filed notice of federal tax lien when the taxpayer has entered into an installment agreement, unless the agreement provides otherwise.
Offers in compromise
An offer in compromise under IRC 7122 settles the liability for less than the full amount. Treas. Reg. 301.7122-1(b) recognizes three grounds: doubt as to liability, doubt as to collectibility (where the taxpayer's assets and income are less than the full liability), and effective tax administration. For an operating business, doubt as to collectibility is the usual ground, and it requires full financial disclosure. The regulation says the IRS will not levy while an offer is pending, for 30 days after rejection, and while a timely appeal of the rejection is under consideration, and that the collection statute is suspended while levy is prohibited.
An offer is a serious undertaking for a business with valuable equipment or receivables, because those assets count toward what the IRS expects. It is not a shortcut. It is the right tool when the numbers say the business cannot pay in full over the collection period.
Where tax liens fit
Under IRC 6321, if a person liable for a tax neglects or refuses to pay it after demand, the amount becomes a lien in favor of the United States on all of that person's property and rights to property. The public notice is a different thing. Under IRC 6323(a), the lien is not valid against purchasers, holders of security interests, mechanic's lienors and judgment lien creditors until a notice of federal tax lien is filed. Once it is filed, it can complicate financing, bonding and sales of assets.
A few lien rules matter especially to operating businesses:
- Financing already in place. IRC 6323(c) protects certain security interests arising after the lien filing under written agreements made before it, including commercial transactions financing agreements covering accounts receivable and inventory, generally for loans or purchases made within 45 days after the filing, and certain construction financing and surety arrangements.
- Withdrawal. IRC 6323(j) allows withdrawal of a notice if the filing was premature or not in accordance with IRS procedures, if the taxpayer entered into an installment agreement, if withdrawal will facilitate collection, or, with the National Taxpayer Advocate's involvement, if withdrawal is in the best interests of the taxpayer and the government. On request, the IRS must make reasonable efforts to notify credit reporting agencies and creditors you name of the withdrawal.
- Hearing rights. IRC 6320 provides notice and an opportunity for a Collection Due Process hearing upon the filing of a notice of lien, parallel to the pre-levy hearing rights in IRC 6330.
Know your industry's special exposure
Some businesses face collection tools others do not. Federal contractors can lose up to 100 percent of contract payments to a continuous levy, with the hearing after the levy; see our federal contractor levy guide. Medical practices face the same 100 percent rule on Medicare payments; see our Medicare levy guide. Contractors and other businesses with customer receivables should read our receivables levy guide. And truckers with unfiled heavy vehicle use tax returns should see our Form 2290 guide.
A sequence for owners
- Pull transcripts for every tax type and period, business and personal.
- Get current: file missing returns and make this quarter's deposits.
- Decide which track fits: Simple Payment Plan, financial-statement installment agreement or offer.
- Prepare financials that hold up to a revenue officer's questions.
- Use your hearing rights on time when a CDP notice arrives.
- Stay compliant for the life of the agreement. A new balance can default the old deal.
The IRS will negotiate with a business that is current. It will collect from one that is not. Get current first, then talk.