IRS expands Simple Installment Agreement options to businesses

In March 2025, the IRS replaced the Individual Streamlined Installment Agreement (SLIA) with the Simple Installment Agreement (SIA). The individual SIA provided more lenient terms for taxpayers by potentially extending the time to pay and also removing the need for direct debit payments in limited circumstances.

Individual Simple Payment Plans  

The new individual SIA provided taxpayers who owe up to $50,000 in assessed tax, penalties and interest (not the total “accrued” tax, penalties and interest) the ability to get into a payment plan that must fully pay the balance by the end of the time the IRS has to collect the tax. This duration is called the collection statute expiration date (CSED).

The CSED extended terms allow taxpayers payment terms up to 10 years from the date the tax is assessed. The new SIA also removed the requirement for individual taxpayers to pay by direct debit from their financial account for qualifying Simple Payment Plans if they owe between $25,000 and $50,000. Obtaining an SIA early in the notice process allowed taxpayers to avoid a Notice of Federal Tax Lien. Taxpayers not in an SIA agreement may be subject to an IRS tax lien determination.

Business payment plan option changes

On Dec. 3, 2025, the IRS updated how it processes business installment agreements. In the past, active businesses that owed $25,000 or less in employment taxes could enter into an “In-Business Trust Fund Express Agreement,” allowing them to pay the total balance owed within 24 months. Businesses that owed between $10,000 and $25,000 were required to have their payments debited directly to qualify for this agreement.  

Prior to Dec. 3, 2025, businesses that owed non-employment/trust fund taxes (such as excise taxes), income taxes or flow-through entity late filing penalties could use the Business Streamlined Installment Agreement option. This allows them to pay an assessed balance up to $50,000 owed within 72 months or the CSED, whichever is less.

As of Dec. 3, 2025, both the In-Business Trust Fund Express Agreement and the Business Streamlined Agreement are now processed under the new “Business Simple Agreement” framework (IRS SB/SE Memo SB-SE-05-1225-0065).

The IRS now offers businesses three Simple Payment Plan options:

1. Active businesses with trust fund taxes. Active businesses with balances owed that include trust fund taxes, such as employment taxes or excise taxes, can now enter a business SIA on balances owed up to $25,000. No direct debit requirement, and the payment terms are extended to allow the business to pay before the CSED (previously 24 months).
2. Out-of-business sole proprietorships with non-trust fund taxes. Defunct sole proprietorships can pay assessed balances up to $50,000 before the CSED.  In the past, payment terms were up to 72 months or the CSED, whichever was shorter.  The direct debit requirement is also removed.
3. Businesses with non-trust fund taxes. The old business SLIA is replaced with new SIA terms that allow the business taxpayer with income tax liabilities or other balances (such as S-corp or partnership late filing penalties) similar to the individual SIA. Businesses with assessed balances of up to $50,000 in liabilities can now receive extended payment terms up to the CSED. Also, no direct debit is required.

Impact on trust fund liabilities 

The most significant change with the new business SIA agreements will be to trust fund liabilities. In the past, many businesses could not use 24-month payment terms to regain compliance. This often led the company to request longer payment terms, which required a tax lien filing and a potential investigation into trust fund liability for the responsible persons. The IRS generally has three years to assess the trust fund recovery penalty against the responsible person, allowing the agency to collect the trust fund portion of the employer's employment taxes. Extending payment terms to CSED will reduce many trust fund investigations if businesses use this option.

Using Simple Installment Agreements

IRS data shows that 95% of individuals and 90% of businesses qualify for the SIA terms. SIAs allow taxpayers to reduce the risk of additional IRS enforcement through tax liens. They are also very simple to obtain. Most SIAs can be obtained online using the IRS Online Payment Agreement application. 

Many taxpayers who owe back taxes use the SIAs or extension to pay agreement options. Taxpayers who cannot use the SIA terms can also explore other options with the IRS. However, most other options require the taxpayer to assess their ability to pay using assets and monthly income. These negotiations can be extensive and take months to secure.  And, if the taxpayer is not in a qualifying SIA, the IRS may file a tax lien, depending on the facts and circumstances.

As the number of taxpayers filing and owing continues to grow, tax pros should consider these new payment options. The new SIA allows more favorable payment terms and is simple to obtain. SIAs also allow the taxpayer to avoid that dreaded tax lien. 

IRS payment plan options change often, so be sure to check in with NATP to stay up to date on the latest changes that may affect you and your clients.