IRS Installment Agreement for Small Businesses: Step‑by‑Step Guide

Written by Business Tax Relief October 29, 2025

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Overview

Have you fallen behind on your business taxes? If so, there’s no need to panic. The IRS offers relief in the form of a payment plan, also known as an installment agreement (IA). With an IA, you can avoid the unpleasant business of dealing with collection actions and pay your back taxes over several months. Not sure how to set up an IRS installment agreement? We’ll walk you through the steps below – or you can give us a call and let us do it for you!

Key Takeaways

Who qualifies: Small businesses generally qualify for a streamlined IRS installment agreement if they owe < $25,000 and can pay in 24 months; sole proprietors can qualify with < $50,000 and up to 72 months. Higher balances may still get an IA, but it’s not guaranteed and requires more documentation.
How to apply & fees: Sole proprietors/independent contractors can apply online via the IRS OPA tool if under $50k; partnerships, C-corps, and S-corps can apply online if under $25k and payable within 24 months. Setup fees: $0 if paid in ≤180 days, $22 (direct debit), or $69 (other payment types).
Timing & compliance: Online applications that meet streamlined criteria are typically approved immediately; mailed requests can take 30 days, and submissions with Form 433-A/433-B take longer. Once approved, you must stay current on filings and payments or the agreement can be terminated.

IRS Installment Agreement Eligibility Requirements

Before you jump into the application process, you’ll need to determine if you’re eligible for a streamlined installment agreement. This is similar to the guaranteed payment plans available to individual taxpayers, where no financial documentation is required. Small business owners automatically qualify for this payment plan if they:

Owe less than $25,000 in back taxes, including penalty and interest fees; and
Have filed all required tax returns; and
Can pay the balance in full within two years (24 months).

If you’re a sole proprietor, that threshold increases to $50,000 with up to 72 months for repayment. For those with higher balances or needing more time to pay off their tax debt, an installment agreement may still be an option, but it’s not guaranteed. There are also different hoops you’ll need to jump through to get approved.

How to Apply For a Streamlined Installment Agreement

Depending on your business structure and the amount of debt, you may be eligible to apply for a payment plan online or by mail.

Sole Proprietors & Independent Contractors

The IRS allows sole proprietors and independent contractors to apply for a streamlined installment agreement online through its Online Payment Agreement (OPA) tool if they owe less than $50,000. You’ll need the following to complete the online application:

An IRS online account. If you haven’t set one up, you need to create your account before applying online for the payment plan.
Your bank routing and account numbers, if making payments by direct debit.
The balance due shown on your tax return, if you haven’t received a balance due notice yet.

If you plan to pay the balance in less than 180 days (short-term option), there is no setup fee. For direct debit, the fee is only $22, and it’s $69 for all other repayment types (check, money order, etc.). You can also apply by mail using Form 9465, Installment Agreement Request.

Partnerships, C-Corps, & S-Corps

Other types of business entities may also apply online if they have less than $25,000 in tax debt and can pay the balance in full within 24 months. To apply as a partnership, C corporation, or S corporation, you’ll need your ID.me credentials or IRS username, as well as the following:

Your Employer Identification Number (EIN), and
The date your business was established, and
Your caller ID from the notice

If you recently filed or your return was audited, but you haven’t received the balance due notice, you’ll also need:

The tax form filed or examined
The tax year for the return in question
Your balance due

Setup fees are similar to those for sole proprietors; $22 for direct debit (required if you owe more than $10,000) and $69 for all other payment types. Submitting an installment agreement request by mail (Form 9465) is also an option.

What If I Don’t Qualify to Apply Online?

If you owe more than $25,000 (or $50,000 for sole proprietors) or need more time to pay your balance, you may still be eligible for an installment agreement. Although you can’t apply online, you can submit Form 9465, as well as a Collection Information Statement. This form provides a more in-depth look at your business’s financials, which the IRS will use to determine your eligibility for a payment plan. Partnerships and corporations will use Form 433-B; sole proprietors and independent contractors use Form 433-A.

Application Process: Sole Proprietor vs. Other Entities

Step	Sole Proprietor	Other Entities
Who Applies?	Individual (SSN)	Business (EIN)
Online Application Allowed?	Yes, if tax debt is < $50,000 and can be paid within 72 months	Yes, if tax debt is < $25,000 and can be paid within 24 months
Mail Form 9465 & Collection Information Statement	Tax debt > $50,000 or needs more time to pay (Form 433-A)	Tax debt > $25,000 or needs more time to pay (Form 433-B)
Setup Fees	$0 (180 days or less), $22 (direct debit), or $69 (other payment types)	$22 (direct debit) or $69 (other payment types)

When Will My Payment Plan Be Approved?

If you meet the requirements for a streamlined installment agreement and apply online, you should receive immediate approval. For those applying by mail, please allow up to 30 days for a response. The IRS will send a written notice detailing the specifics of your agreement and payment terms.

If you were required to submit Form 433-B or 433-A, it may take additional time for the IRS to approve or decline your request. Once a determination is made, you’ll receive a notice by mail.

Final Tips

Once you’re approved, you must remain compliant and make all payments on time. Failure to do so will result in the termination of your agreement, and collections will resume. For those required to submit a Collection Information Statement, it may be prudent to seek the assistance of a tax professional. They can not only help complete the necessary forms but also negotiate with the IRS on your behalf. To learn more about your options or to see if you’re eligible for a payment plan, call 855-774-0271 and request a free consultation today!