The business limits
Until recently the simple, no-disclosure payment plan was mainly for individuals, and businesses with payroll tax balances had a smaller version that had to be paid within 24 months. The IRS extended Simple Payment Plans to businesses, and its manual revision of July 21, 2026 removed the 24-month rule. A business plan now has to pay the balance in full before the collection period ends.
| Type of balance | Limit (assessed tax, penalties and interest) | Financial statement |
|---|---|---|
| Business without trust fund taxes (for example, corporate income tax) | $50,000 or less | Not required |
| Business with trust fund taxes (Form 941 withholding) | $25,000 or less | Not required |
| Out-of-business sole proprietorship with trust fund taxes | $50,000 or less | Not required |
| Any business above these limits | No limit | Form 433-B generally required |
Within the limits, the IRS says a Simple Payment Plan needs no collection information statement, no lien determination and no trust fund recovery penalty determination. The manual adds conditions for trust fund cases handled by a revenue officer, so do not assume the personal penalty is off the table.
Why trust fund taxes are different
Part of every payroll tax deposit is not the employer's money. The income tax and the employee share of Social Security and Medicare are withheld from wages and held in trust for the government. When they are not paid over, the IRS can assess the trust fund portion personally against any responsible person who willfully failed to pay it. The IRS describes a responsible person as someone with the duty and the power to direct the collecting, accounting and paying of those taxes, and it treats paying other creditors while the taxes go unpaid as a sign of willfulness.
That personal exposure survives the business closing. Our pages on payroll tax debt and the trust fund recovery penalty explain how the assessment works and who it reaches.
How a business applies
Business accounts cannot apply for a payment plan online. The routes are by phone, by mail or in person.
- 1.Bring every return up to date: Forms 941, 940 and the income tax return for the entity.
- 2.Make the current quarter's deposits in full. A business that is still falling behind will not be given a plan for the old quarters.
- 3.Call the number on the notice or 800-829-4933, 7 a.m. to 7 p.m. local time, or visit a Taxpayer Assistance Center.
- 4.If the balance is above the limit, complete Form 433-B with the business's bank statements, receivables, assets and a current profit and loss statement.
Staying current matters more than the plan
The most important number in a payroll tax case is not the old balance. It is whether this quarter's deposits are being made. Every missed deposit adds a failure-to-deposit penalty and enlarges the trust fund amount that can follow the owners personally. A plan for the old quarters is worth setting up only once the current ones are being paid.
The same condition applies to an offer in compromise. The IRS will not process an offer from an employer who has not made deposits for the current quarter and the two before it.
Penalty relief for Form 941 filers
The Automatic Exemption from Penalty, which began in summer 2026, covers quarterly employment returns as well as annual ones. It applies to 2026 quarterly returns and later, on Forms 940, 941, 943, 944 and 945, and it prevents the failure-to-file, failure-to-pay and failure-to-deposit penalties from being assessed when the business has a clean record.
- The same return type was filed and paid timely for the prior 12 consecutive quarters.
- No penalty was assessed in that period, or any that was assessed was later abated for reasonable cause or IRS error.
- The IRS did not waive the failure-to-deposit penalty four or more times in those 12 quarters.
- The failure-to-deposit penalty was not charged for avoiding the electronic deposit system (EFTPS).
What the options look like for a business
| Option | When it fits | Watch for |
|---|---|---|
| Simple Payment Plan | Balance within the limits and current deposits being made | Must full pay before the collection period ends |
| Plan with Form 433-B | Larger balance; the business is viable | The IRS reviews receivables, assets and owner pay |
| Offer in compromise | The business cannot pay in full from assets and income | Deposits must be current; businesses file by mail |
| Closing the business | The business cannot meet current deposits | Trust fund amounts can still be assessed personally |
Where we come in
For a business with a payroll tax balance, our work is the record: reading the account transcripts for every open quarter, preparing unfiled returns, separating the trust fund portion of the balance from the rest, working out the collection statute date for each assessment, and preparing the Collection Information Statement with its documents. Who performs your payroll and deposits is a separate question, and it is set out in writing with whoever provides that service. We give you a scope and a price in writing before anything starts. See tax resolution.
Figures on this page were checked against the IRS and Massachusetts sources listed alongside on October 1, 2026. They change — confirm the current amount before relying on one.
General information for owner-led businesses, not advice for your specific situation. Tax and accounting rules change, and how they apply depends on facts particular to your business. Talk to us — or to another qualified professional — before acting on anything here.
