If your business is facing a tax bill it can’t afford, the worst thing you can do is wait for the IRS to come knocking. As of January 2026, the IRS has overhauled its payment plan options, making it easier for small businesses to get back into compliance without the heavy paperwork of the past.
Under the new Simple Payment Plan (formerly known as Streamlined or In-Business Trust Fund Express), the IRS is offering more flexible terms to prevent business closures and asset seizures.
1. The 2026 "Simple Payment Plan" for Businesses
Starting this year, the IRS has replaced several older programs with a unified "Simple Payment Plan" for businesses.
- If you owe $25,000 or less: You generally qualify for a Simple Payment Plan without having to provide a full financial disclosure (Form 433-B) or undergo a "Trust Fund Recovery Penalty" determination.
- Repayment Period: You typically have until the Collection Statute Expiration Date (CSED)—which is usually 10 years—to pay the balance in full. This is a significant improvement over the old 24-month limit.
- Lien Prevention: If you owe $25,000 or less and set up a Simple Payment Plan, you can often avoid a Notice of Federal Tax Lien, protecting your business's credit rating.
2. Options for Larger Debts (Over $25,000)
If your debt exceeds the "Simple" threshold, you aren't out of luck, but the scrutiny increases:
- Standard Installment Agreement: For balances up to $50,000, you may still qualify for an agreement with minimal financial verification, provided you set up a Direct Debit Installment Agreement (DDIA).
- Non-Streamlined Agreements: If you owe more than $50,000, the IRS will require a deep dive into your business's finances. They will look at your assets, accounts receivable, and monthly income to determine the "maximum" you can afford to pay.
3. The "Full Compliance" Rule
The IRS will not grant a payment plan if you are "out of compliance." This means:
- All Returns Filed: You must have filed every required tax return (even if you couldn't pay them).
- Current Year Deposits: You must be making all current-year federal tax deposits on time. The IRS won't let you add "new debt" to an "old debt" payment plan.
4. What About an Offer in Compromise (OIC)?
Can you settle for less than you owe? In 2026, the IRS still offers the Offer in Compromise, but it is a rigorous process. It is generally only accepted if:
- There is "Doubt as to Collectability" (you simply don't have the assets or income to ever pay the full amount).
- It is a "Lump Sum" or "Periodic Payment" offer.
- Note: For 2026, the IRS has introduced Form 4547 (Trump Accounts), which may impact how employee benefits are handled during settlement negotiations.
5. Why "Going It Alone" is Risky
When you call the IRS to set up a plan, their goal is to collect as much money as possible, as fast as possible. They may push you into a monthly payment that "strangles" your business’s cash flow, leading to a default.
At Wolf Tax, we act as the barrier between you and the IRS. We negotiate terms that satisfy the government while ensuring your business has enough capital to stay operational.