What changed, and when
The streamlined installment agreement was the centerpiece of the 2012 Fresh Start expansion. It let people who owed up to $50,000 pay monthly without disclosing their finances, as long as they paid within a fixed term and, above $25,000, by direct debit.
The IRS revised section 5.14.5 of the Internal Revenue Manual on July 21, 2026. The revision renamed the agreement the Simple Payment Plan and removed three of the old conditions. Pages that still describe a six-year limit are describing the rule as it stood before that date.
| Streamlined agreement (old rule) | Simple Payment Plan | |
|---|---|---|
| Individual balance limit | $50,000, in two tiers | $50,000 or less, one tier |
| Time to pay | 72 months (2012 rule, since removed) | By the collection statute expiration date |
| Direct debit or payroll deduction | Required from $25,001 to $50,000 | Not required |
| Financial statement | Not required | Not required |
| Lien determination | Generally not required | Not required, though a revenue officer may still file |
| Businesses with trust fund taxes | Separate express agreement, $25,000, paid within 24 months | Simple Payment Plan (Business Trust Fund), $25,000 or less, no 24-month rule |
| Businesses without trust fund taxes | Not part of the 2012 individual rule | $50,000 or less |
Who qualifies
The IRS says more than 90% of individual taxpayers will qualify. The test has two parts: the size of the balance, and whether you are current.
- Individuals: $50,000 or less in assessed tax, penalties and interest. Sole proprietors and independent contractors apply as individuals
- Businesses without trust fund taxes: $50,000 or less
- Businesses with trust fund taxes, such as payroll withholding: $25,000 or less, or $50,000 or less for a sole proprietorship that is out of business
- Everyone: current with all filing and payment requirements. In practice that means every required return is filed and this year's withholding or estimated payments are being made
The limit counts the assessed balance across all years, including assessed penalties and interest. If you are a little over, paying part of the balance before you apply may bring you inside it. If returns are missing, they come first: see Fresh Start with unfiled returns.
How long you have, and what the payment must be
The plan has to pay the balance in full, including the interest and penalties that will build up, by the collection statute expiration date. That date is generally 10 years from when each tax was assessed, which is why the IRS says most taxpayers have up to 10 years to pay.
It does not mean every plan runs 10 years. If the oldest year on your account was assessed six years ago, about four years of collection time remain for it, and the payment has to fit that. This is why knowing the collection statute date for each year matters before you pick a monthly amount.
A longer term also costs more. The IRS's own page says the longer the term you choose, the more interest and penalties you will owe.
Illustrative example. A balance of $24,000 spread over 48 months is $500 a month before interest and penalties are added, and over 96 months it is $250 a month. The lower payment is easier to keep, but interest runs for twice as long, so the total paid is higher.
What it costs
On top of the setup fee, interest keeps running at the federal short-term rate plus 3 percentage points, set each quarter and compounded daily. The failure-to-pay penalty also continues, at a reduced 0.25% a month for individuals who filed the return by its due date. The page on penalties and interest shows how they add up.
| How you pay each month | Apply online | Apply by phone, mail or in person | Low-income taxpayers |
|---|---|---|---|
| Direct debit from a checking account | $29 | $107 | Waived |
| Direct Pay, EFTPS, check, money order or card | $69 | $178 | $43, which may be reimbursed |
How to apply
- 1.Confirm every required return has been filed. The IRS requires all returns to be filed before it approves a Simple Payment Plan
- 2.Sign in to your IRS online account and check the balance for each year
- 3.Individuals: use the online payment agreement application on IRS.gov. You get an immediate answer. The step-by-step guide shows each screen
- 4.Choose direct debit if you can. It has the lowest fee and is the only payment method that later supports a lien withdrawal request
- 5.Businesses, and anyone who cannot use the online tool: call the number on your notice, 800-829-1040 for individuals or 800-829-4933 for businesses, or file Form 9465
- 6.Pick a payment you can keep in a bad month. A default is worse than a slightly longer plan
What a Simple Payment Plan does not do
The plan stops enforced collection while you keep to it. It leaves several things untouched, and the advertising around Fresh Start tends to skip them.
- It does not reduce the tax. You pay the full balance
- It does not stop interest, and it only halves the failure-to-pay penalty rate
- It does not guarantee that no lien notice is filed. No lien determination is required, but a revenue officer may still file one
- It does not remove a lien notice that is already filed. That is a separate request with its own conditions, covered in Fresh Start lien withdrawal
- It does not release your refunds. The IRS applies future refunds to the balance
- It does not survive a new unpaid balance. Owing again next April can default the plan
If you owe more than $50,000 or cannot afford the payment
Above the limit, or when the payment needed to clear the balance in time is more than you can manage, the IRS generally asks for a collection information statement and the plan becomes a question of what you can afford. The page on owing the IRS more than $50,000 covers that route, and the existing guide to IRS installment agreements explains how agreements default.
Where we come in
Most people who qualify can set up a Simple Payment Plan themselves, online, for the IRS setup fee. Where we help is before that point: reading the transcripts so the balance and the collection date for each year are known, preparing any unfiled returns so the application can go through, and checking whether penalty relief should be requested first. We give you a scope and a price in writing before anything starts. See tax resolution for the scope.
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.
