The IRS changed these rules on July 21, 2026. In-Business Trust Fund Express agreements no longer exist by that name, the 24-month payoff requirement is gone, and the direct debit requirement on balances between $10,001 and $25,000 has been removed.
What replaced them is called a Simple Payment Plan (Business Trust Fund). This page covers the current thresholds, the deposit compliance that decides whether you qualify at all, and the part most owners underestimate: a business payment plan does not stop the IRS from coming after you personally for the trust fund portion.
IRM 5.14.5 was reissued, and the IRS substantially revised its business installment agreement procedures.
| Item | Old rule | Current rule |
|---|---|---|
| Name | In-Business Trust Fund Express installment agreement | Simple Payment Plan, Business Trust Fund |
| Payoff term for trust fund balances | 24 months | Full payment by the collection statute expiration date, computed with a required IRS calculator |
| Direct debit | Required on balances over $10,000 | Not required |
| Managerial approval | Required under the prior IBTF Express procedure | Not required |
| Non-trust-fund threshold | Two tiers, $25,000 and $25,001 to $50,000, with a 72-month minimum payment rule | A single $50,000 or less threshold, tiers and the 72-month rule removed |
| Reinstatement | Limited to $10,000 | Limitation deleted |
The change came through IRM 5.14.5, effective July 21, 2026, which supersedes the October 2021 version. Any material describing a 24-month requirement as the current rule is outdated as of July 21, 2026, although older material using that terminology may remain online.
It depends on whether the balance includes trust fund taxes and whether the business is still operating.
| Situation | Threshold | What you file | Term |
|---|---|---|---|
| Business with trust fund taxes | $25,000 or less in assessed tax, penalties, and interest | Simple Payment Plan (Business Trust Fund); no financial statement required | Full payment by the collection statute expiration date |
| Business without trust fund taxes | $50,000 or less in assessed tax, penalties, and interest | Simple Payment Plan; no financial statement required | Up to roughly 10 years, bounded by the statute |
| Out-of-business sole proprietorship | $50,000 or less | No financial statement required | Same |
| Above those thresholds | No Simple Payment Plan threshold; other installment agreement criteria apply | Form 433-B and other financial information as required | Based on financial analysis and collection alternatives |
| Cannot pay in full before the statute expires | No limit | Form 433-B plus a partial payment agreement | Payments continue until the CSED, with any remaining legally uncollectible balance addressed when the collection period expires. |
Two definitions matter here. The threshold is measured by the unpaid assessment balance, which includes tax, assessed penalties, assessed interest, and other assessments, but excludes accrued unassessed penalties and interest. And it is measured when the agreement is granted, so a business can pay down the balance to qualify, though it cannot use the first installment payment to do so.
Current terms are on the IRS page for Simple Payment Plans for individuals and businesses. Businesses cannot apply online. The IRS directs business taxpayers to call the number on the notice or visit a Taxpayer Assistance Center. For a business taxpayer applying by phone or in person, the current setup fee is $107 with direct debit or $178 without direct debit, rather than the lower online rates.
One form correction worth making, because it circulates widely. Form 433-D is the installment agreement document; it is not the initial request form. The financial statement is Form 433-B, and the request form is Form 9465.
For the partial payment option, our page on the partial pay installment agreement covers how those plans work and how they compare to an offer in compromise, and our overview of IRS payment plans covers the individual rules.
Because they were never the business’s money, the statute makes them a trust.
26 U.S.C. § 7501(a) provides that whenever a person is required to collect or withhold tax from another person and pay it over, “the amount of tax so collected or withheld shall be held to be a special fund in trust for the United States.”
That framing drives everything else. Spending withheld income tax and the employee share of FICA on payroll or rent is using money the business was holding for the government, not a late bill payment, which is why the IRS treats these balances more aggressively than a corporate income tax balance of the same size.
One precision point is often reported wrong. The employer’s matching share of Social Security and Medicare is not trust fund money. It is the business’s own tax. The trust fund portion is the withheld income tax plus the employee share of FICA, and that distinction determines the size of the personal exposure discussed below. Collected excise taxes are also trust fund taxes under § 7501.
Yes. This is a hard prerequisite, not a preference, and it is where most requests fail.
IRM 5.14.1, reissued July 20, 2026, states it directly: “The prerequisite to any agreement: Filing compliance = all required returns are filed or on an approved extension. Payment compliance = all required federal tax deposits and/or estimated tax payments are current.” It adds that compliance “must be current from the date the IA begins.”
IRM 5.14.5.4 is blunter still: “If the taxpayer is not in filing compliance, a payment plan cannot be granted.”
Sole proprietors and single-member LLC owners must also remain current with any individual and business filing and payment obligations that apply to them. And the money to fund current deposits has to come from somewhere before the past-due balance gets a single dollar, which usually means the business has to cut costs first.
Your schedule is set by a lookback period, not by how often you run payroll.
Publication 15 for 2026 sets it out. For Form 941 filers, the lookback period runs July 1 through June 30, four quarters ending the June before the year in question. Report $50,000 or less of taxes in that window, and you are a monthly depositor. Report more and you are semiweekly.
| Schedule | When the deposit is due |
|---|---|
| Monthly | By the 15th day of the following month |
| Semiweekly, payday Wednesday through Friday | By the following Wednesday |
| Semiweekly, payday Saturday through Tuesday | By the following Friday |
| Any schedule, $100,000 accumulated on any day | By the next business day |
The $100,000 rule has a consequence people miss. A monthly depositor who accumulates $100,000 in liabilities on any day becomes a semiweekly depositor the next day and remains semiweekly for the rest of that year and the following year, and missing the new schedule incurs penalties on every deposit after that.
New businesses start as monthly depositors, because liability in the pre-existence lookback quarters counts as zero.
A tiered percentage of the amount that should have been deposited, running from 2% to 15%.
| How late | Penalty | Authority |
|---|---|---|
| Not more than 5 days | 2% | 26 U.S.C. 6656(b)(1)(A)(i) |
| More than 5 but not more than 15 days | 5% | 26 U.S.C. 6656(b)(1)(A)(ii) |
| More than 15 days | 10% | 26 U.S.C. 6656(b)(1)(A)(iii) |
| Amounts paid directly to the IRS or with the return instead of deposited | 10% | Publication 15 |
| Still unpaid 10 days after the first delinquency notice, or on notice and demand for immediate payment, whichever is earlier | 15% | 26 U.S.C. 6656(b)(1)(B) |
Two points on that table. The fourth row surprises people: paying the IRS directly rather than depositing through the deposit system is itself a 10% penalty, even if the money arrives on time. And the 15% trigger is the earlier of the two events in the fifth row, not simply “after notice and demand.”
There are defenses. Section 6656(a) waives the penalty for reasonable cause not due to willful neglect, and § 6656(c) provides a first-time depositor exception where the failure occurs in the first quarter deposits were required, or on the first deposit after a frequency change, and the return was filed on time. Days are counted as calendar days from the due date.
Yes, for the trust fund portion, through the trust fund recovery penalty. It is a personal assessment against individuals, collectible from personal assets.
26 U.S.C. § 6672(a) makes any person required to collect, truthfully account for, and pay over the tax, who willfully fails to do so, “liable to a penalty equal to the total amount of the tax evaded, or not collected, or not accounted for and paid over.”
The statute never says “100%” and never says “trust fund.” Both come from how the IRS computes it: the penalty equals the unpaid withheld income tax plus the employee share of withheld FICA. The employer’s matching share is excluded, so the penalty is smaller than the full Form 941 balance.
Anyone with the duty and the power to direct the collecting, accounting, and paying of trust fund taxes. There can be more than one.
The IRS list reaches officers and employees of a corporation, partners and partnership employees, corporate directors and shareholders, trustees of a nonprofit board, anyone with authority and control over funds who can direct their disbursement, and third-party payers including payroll service providers and professional employer organizations.
The test is independent judgment. As the IRS puts it, ‘an employee is not a responsible person if the employee’s function was solely to pay the bills as directed by a superior, rather than to determine which creditors would or would not be paid.’ Title alone does not determine responsibility. The IRS looks at the person’s authority to collect, account for, and pay trust fund taxes, including authority over the business’s financial decisions.
Much less than it sounds. There is no requirement of bad motive.
The IRS standard is that the responsible person must have been, or should have been, aware of the outstanding taxes, and either intentionally disregarded the law or was plainly indifferent to its requirements. Its guidance says expressly that “no evil intent or bad motive is required.”
And this is the sentence that decides most cases: “Using available funds to pay other creditors when the business is unable to pay the employment taxes is an indication of willfulness.” An owner who chose to make payroll or pay a supplier instead of depositing withheld tax has usually supplied the government its willfulness proof. Details are on the IRS page covering employment taxes and the trust fund recovery penalty.
An interview, a proposal letter, and a 60-day window.
| Step | What happens | Timing |
| Form 4180 interview | A recorded interview about your role, signature authority, and knowledge of the balances, conducted in person or by phone | Attempted at initial contact |
| TFRP determination | RO decides whether to pursue the penalty | Generally no later than 120 days after case assignment |
| Form 4183 approval | The revenue officer’s recommendation goes to a group manager | Group manager generally approves no later than 120 days from the decision to pursue |
| Letter 1153 and Form 2751 | The proposed assessment, hand delivered or sent by certified mail, with a quarter-by-quarter breakdown | Within 20 days of Form 4183 approval |
| Your response | Sign the waiver, or protest to the Independent Office of Appeals | 60 days, or 75 days if the letter is addressed outside the United States. The IRS then allows an additional five days to receive and process timely mailed protests. |
Two things about that timetable are worth knowing before you sign anything. The interview happens even if you sign the waiver: IRM 5.7.4 states that “a Form 4180 interview must still be completed, even if the responsible person or persons sign Form 2751.” And signing does not end your rights. The manual says a signature on Form 2751 “does not extinguish a responsible person’s appeal rights,” and the IRS will not treat it as conclusive until the restriction period runs.
For qualifying business trust fund accounts, the new rules can eliminate the need for a TFRP determination. If the unpaid balance is $25,000 or less, the taxpayer qualifies for and receives a Simple Payment Plan (Business Trust Fund), the liability will be paid in full by the CSED, and the agreement is granted within 120 calendar days of case assignment, a TFRP determination is not required. The IRS still directs revenue officers to follow the applicable TFRP case disposition procedures.
Our page on how to appeal the trust fund recovery penalty covers the protest itself.
Not reliably. For business trust fund cases that fall outside the new Simple Payment Plan (Business Trust Fund) no-determination rule, the IRS generally does not request TFRP assessment when the business stays current on its installment agreement, subject to several exceptions.
IRM 5.14.7.4.1 says the IRS will generally not request assessment “if business taxpayers meet the terms of installment agreements,” then sets out when it will anyway:
Even after a TFRP is assessed, the IRS usually holds collection while the business pays. Collection from the responsible person may still proceed in appropriate circumstances while the business agreement is in effect. The IRS requires the revenue officer to document the reason for taking collection action and obtain group manager concurrence.
One narrow exception to the usual TFRP determination process exists under the new rules. A trust fund determination is skipped entirely only where the balance is $25,000 or less, the plan full-pays by the statute date, and the plan is granted within 120 calendar days of the case being assigned. That 120-day clock is the strongest practical reason to move quickly.
Pyramiding means continuing to accrue new employment tax liabilities while failing to pay earlier liabilities, sometimes through successor entities. Under the current rules, a Simple Payment Plan (Business Trust Fund) cannot be granted when the request meets the IRS’s ‘Solely to Delay’ criteria, including indications that the business may be using pyramiding or successor entities to avoid tax responsibilities. Businesses flagged as repeaters may still qualify, but only after they stop accruing new liabilities, resume making deposits, and file everything due.
The enforcement tools here are administrative and do not require a court. Levy, seizure, and the trust fund recovery penalty are all available to a revenue officer without proving fraud to anyone.
Low in absolute numbers, and getting more serious for the cases that are opened.
| IRS employment tax program | FY2025 | FY2024 | FY2023 |
|---|---|---|---|
| Investigations initiated | 205 | 209 | 221 |
| Prosecutions recommended | 142 | 113 | 115 |
| Defendants sentenced | 121 | 104 | 103 |
| Incarceration rate | 82% | 72% | 84% |
| Average months to serve | 22 | 17 | 20 |
Read the trend rather than the totals. Investigations drifted down while prosecution recommendations rose 26%, sentencings rose 16%, and the incarceration rate climbed ten points to 82%, above the agency-wide average of 76%. Time served went from 17 months to 22. Figures come from the IRS Criminal Investigation annual report.
Get current on deposits, then deal with the balance. In that order, because the second is impossible without the first.
Start the current quarter clean. Making current deposits on time helps establish ongoing compliance and can be important evidence of the business’s conduct after the delinquency. Then file any missing Form 941 returns. The IRS generally cannot grant the payment plan while required returns remain unfiled.
Then decide who is exposed personally and get advice before the Form 4180 interview happens. The Form 4180 interview can be one of the most consequential events in a payroll tax case, and the answers are usually given before anyone thought about how they would read on paper. Our page on who the IRS holds accountable for payroll tax errors covers the responsibility question.
General employment tax obligations are set out on the IRS employment taxes page.
A payroll tax problem can quickly become two separate collection matters: the business’s liability and the potential personal liability of responsible individuals. Those interests diverge quickly, and the decisions that matter get made in the first few weeks.
Ayar Law handles business collection matters, payroll tax cases, and trust fund recovery penalty defense in Michigan and throughout the United States, from offices in Farmington Hills and Grand Rapids. Call (248) 262-3400 to request a confidential case review, or contact us through our website.
Last updated August 2026.
This page is general information about federal tax collection procedures. It is not legal advice, and reading it does not create an attorney-client relationship. The IRS revised its business payment plan procedures in July 2026, and further guidance may follow. Deposit thresholds, penalty rates, and program terms change. Outcomes depend on the facts of each case, and prior results do not predict future outcomes. Speak with a licensed tax attorney before responding to a payroll tax notice or a trust fund recovery penalty interview.
