The Internal Revenue Service encourages all taxpayers, including small business owners, to pay their taxes on time and in full to avoid interest and penalties. Failure to pay could lead to the IRS placing a lien on your business property, seizing your business's bank accounts or forcing you to sell your business assets to pay off the debt. Small business owners can avoid these and other collection actions by enrolling in a tax-payment plan.
In-Business Trust Fund Express Installment Agreements
The In-Business Trust Fund Express Installment Agreement is just one of the options available to small business owners under the IRS Fresh Start Program. This type of payment plan is designed for small businesses with a tax liability of $25,000 or less that currently have employees. Under this type of agreement, you must repay the balance within 24 months or before the time limit on collections expires, whichever is earlier. You're also required to enroll in a direct debt payment arrangement if you owe between $10,000 and $25,000.
Streamlined Installment Agreements Under $25,000
The Streamlined Installment Agreement gives small business owners more time to pay down their back tax debt. If you owe $25,000 or less, you may be able to qualify for this type of payment plan regardless of your business structure. There are no restrictions on the types of tax owed for defunct business, but operating businesses are limited to income tax liabilities only. If your business is eligible for a Streamlined Installment Agreement, you must pay the balance in full within 72 months or before the statutory limit on collections expires. During the repayment period, you must be compliant with all payment and filing requirements.
Streamlined Installment Agreements Over $25,000
If you owe more than $25,000 but less than $50,000 in unpaid business taxes for a defunct sole proprietorship, you may also be eligible for a Streamlined Installment Agreement. You'll be required to pay the balance off within 72 months or before the collection date expires, whichever occurs sooner. If you qualify for this type of plan, you'll also have to enroll in a direct debt arrangement to make your payments automatically. If you owe more than $50,000, the IRS will allow you to pay down the balance to qualify for this type of agreement.
How to Apply
Small business owners can apply for an installment agreement in several ways. To request an In-Business Trust Fund Express Installment Agreement, you can call the IRS at 1-800-829-4933, visit your local IRS office or complete IRS Form 9465 and mail it to the nearest IRS processing center. To request a Streamlined Installment Agreement, you can choose from any of these options or you can submit an online payment agreement application. When applying, you'll need to provide your business's tax identification number, the total amount owed, the amount you plan to pay each month and your bank account information. Additional financial information may be necessary if you're applying for a Streamlined Installment Agreement and you owe more than $25,000.