The Tax Times

Wednesday, February 4, 2026

IRS Simple Payment Plans Expanded to Businesses: What You Need to Know for 2026

In e-News for Tax Professionals 2026-05, the IRS has quietly made a big change that will matter to a lot of cash‑strapped businesses and their owners: “Streamlined Installment Agreements” have been rebranded and expanded as Simple Payment Plans, and as of December 3, 2025, they now fully cover many business taxpayers, not just individuals.

For practitioners and business owners, this means more cases can be resolved quickly, without financial disclosures, with predictable terms and fewer headaches.

What Is a Simple Payment Plan?

A Simple Payment Plan is a long‑term payment arrangement with the IRS for taxpayers who owe but can’t pay in full right away. These plans are designed to be quick to set up and low‑friction:

· No collection information statement (no Form 433) is required to qualify.

· No lien determination is required as part of the qualification criteria.

· No trust fund recovery penalty determination is required just to get into the plan.

· Taxpayers must be current with all filing and payment obligations.

Previously, this streamlined treatment was largely discussed in the context of individuals, but now the IRS has folded key business installment agreement programs into this “Simple Payment Plan” framework.

The Big Update: Businesses Are Now Included

On December 3, 2025, the IRS updated how it processes business installment agreements. Two familiar business programs are now handled under the Simple Payment Plan umbrella:

· In‑Business Trust Fund Express Agreement

· Business Streamlined Agreement

Both are now processed using the updated Simple Payment Plan qualifications. In practice, this means more in‑business and out‑of‑business taxpayers can get a plan set up quickly if they stay under the new dollar thresholds and are current on filings.

Who Qualifies? Key Dollar Thresholds

The Simple Payment Plan is all about the total assessed tax, penalties, and interest. Here are the current thresholds:

Individuals

· Total assessed tax, penalties, and interest of 50,000 dollars or less.

This continues the long‑standing streamlined concept for 1040 taxpayers, now under the “Simple Payment Plan” label.

Businesses With Trust Fund Taxes

Trust fund taxes are amounts withheld from employees (such as federal income tax withholding and the employee portion of FICA) that the business holds in trust for the government.

For businesses with trust fund taxes:

· 25,000 dollars or less in assessed tax, penalties, and interest; or

· 50,000 dollars or less for an out‑of‑business sole proprietorship.

That last point is important: an out‑of‑business sole proprietor with trust fund exposure can still benefit from the higher 50,000‑dollar threshold.

Businesses Without Trust Fund Taxes

For businesses that do not owe trust fund taxes (for example, some income‑tax‑only cases):

· 50,000 dollars or less in assessed tax, penalties, and interest.

What If the Balance Is Too High?

If a taxpayer does not qualify for a Simple Payment Plan under these thresholds, they may still qualify for another type of payment plan under standard IRS installment agreement rules. That may require a collection information statement, lien analysis, and possibly a more detailed negotiation.

Basic Requirements: Staying Current

All applicants for a Simple Payment Plan must be current with filing and payment obligations. That generally means:

· All required returns are filed.

· Current‑year withholding or estimated tax payments are up to date.

For businesses, that also means current federal tax deposits must be made on time if the business is still operating.

The IRS will not approve a Simple Payment Plan if the taxpayer is still accruing new balances through missed deposits or estimated payments.

Payment Terms and Methods

While the exact terms can vary by case, the Simple Payment Plan is intended to fit within the normal collection statute, which often allows several years for full payment. Longer terms, however, mean more interest and penalties over time.

Accepted payment methods include:

· Direct debit from a bank account (often the smoothest and most favored method).

· Monthly payments via IRS Direct Pay.

· Debit or credit card, digital wallet, or cash through approved third‑party processors.

Direct debit can reduce setup fees in some situations and tends to lower default risk.

How to Apply: Individuals vs. Businesses

The application path is different for individuals and businesses.

Individuals

Individuals can:

· Sign in to their IRS online account to request a Simple Payment Plan.

· Call the phone number listed on their IRS notice.

· Call general IRS individual accounts at 800‑829‑1040.

Online access remains the fastest route for many 1040 balances that fall within the 50,000‑dollar limit.

Businesses

Businesses or their authorized representatives can:

· Call 800‑829‑4933 (business and specialty tax line).

· Visit a local Taxpayer Assistance Center (TAC) after scheduling an appointment.

These channels now process eligible business installment requests under the updated Simple Payment Plan rules.

Practical Takeaways for Business Owners and Advisors

For owners and advisors, the expanded Simple Payment Plan rules create several planning opportunities:

· Faster resolution for qualifying in‑business 941 and 1120 cases with balances under the new thresholds.

· Less intrusive setup for many out‑of‑business entities and sole proprietors, especially with trust fund exposure under 50,000 dollars.

· Clear guidance on when a case can be handled quickly versus when a full‑blown financial disclosure‑based installment agreement is necessary.

For more detail, including the latest payment terms and options, the IRS maintains a dedicated “Simple Payment Plans for individuals and businesses” page on IRS.gov.

Need Help with an Installment Payment Plan?

Contact the Tax Lawyers at

Marini& Associates, P.A.

for a FREE Tax HELP Contact Us at:

www.TaxAid.com or www.OVDPLaw.com

or Toll Free at 888-8TaxAid (888) 882-9243

Tuesday, February 3, 2026

Fifth Circuit Shields Limited Partners From Self‑Employment Tax in Sirius Solutions v. Commissioner

Sirius Solutions, L.L.L.P. v. Commissioner, No. 24-60240 (5th Cir. Jan. 16, 2026), is a major taxpayer win that adopts a bright-line, liability-based definition of “limited partner” for the Section 1402(a)(13) self-employment tax exception. It rejects the Tax Court’s functional analysis and holds that partners in a state-law limited partnership (including an LLLP) who have limited liability qualify for the limited partner exception on their distributive shares, even if they materially participate, with self-employment tax generally limited to their guaranteed payments.

What the Fifth Circuit Held

· A “limited partner” under Section 1402(a)(13) means a partner in a limited partnership who has limited liability under applicable state law.

· The phrase “as such” in Section 1402(a)(13) means that the exception applies to income earned in the partner’s legal capacity as a limited partner, not to compensation for services (e.g., guaranteed payments).

· The court expressly rejected the Tax Court’s “functional analysis,” which had disqualified Sirius’s limited partners because they were actively involved in the consulting business.

· The decision vacates the Tax Court and remands, but there is little left to resolve other than mechanics given the court’s construction of “limited partner.”

Facts and Procedural Background

· Sirius Solutions operated as a Texas limited liability limited partnership (LLLP), with a corporate general partner (Sirius GP, LLC) holding a very small percentage interest and multiple limited partners.

· The limited partners all had limited liability under Texas law but also provided substantial services to the consulting firm.

· Sirius treated the limited partners’ distributive shares (other than guaranteed payments) as exempt from self-employment tax under Section 1402(a)(13).

· The IRS recharacterized a large portion of those amounts as subject to SE tax, and the Tax Court sided with the IRS using a multi-factor functional test focused on participation and “passive investor” status.

· On appeal, the Fifth Circuit reversed, finding the Tax Court’s functional interpretation inconsistent with the statutory text and historical usage of “limited partner.”

The Court’s Reasoning

· Text and ordinary meaning: The court looked to dictionaries and contemporaneous usage at the time Section 1402(a)(13) was enacted and concluded that “limited partner” was universally understood as a partner whose liability is limited by state limited partnership statutes.

· Administrative materials: The opinion relied on historic SSA and IRS guidance that tied “limited partner” status to limited liability, not to a passive-investor or non-service test.

· Structure of Section 1402: The court noted that where Congress wanted to condition SE tax treatment on the provision of services, it knew how to do so expressly (e.g., in nearby Section 1402(a)(10)), and it did not add such language to Section 1402(a)(13).

· “As such” language: The court read “as such” as limiting the exclusion to the partner’s capacity as a limited partner but not as importing a separate “passivity” or “no services” requirement.

· Rejection of Soroban and similar views: The panel explicitly disapproved the Second Circuit’s Soroban Capital Partners decision and other authorities reading a “passive investor” gloss into “limited partner.”

Practical Implications for Limited Partners and Fund Managers

· Planning clarity in the Fifth Circuit: Within the Fifth Circuit (Texas, Louisiana, Mississippi), partners with limited liability in a state-law limited partnership or LLLP can generally treat their distributive shares as excluded from SE tax, regardless of their level of services, subject to SE tax on guaranteed payments.

· Entity choice for managers: Fund and asset management structures using limited partnerships with LLLP features gain significant comfort that GP and LP interests with limited liability can be planned to minimize SE tax, so long as the state-law limited partnership form and liability protections are respected.

· Guaranteed payments remain exposed: The opinion repeatedly notes that guaranteed payments for services (and any other clearly service-based compensation streams) remain subject to self-employment tax.

· Open questions: Commentators highlight unresolved issues, including whether owners of the general partner entity in an LLLP might themselves be treated as “limited partners” for purposes of the exception and how other circuits (notably the First and Second, which have pending cases) will respond to Sirius.

· Golsen and Tax Court cases: For taxpayers in the Fifth Circuit, the Tax Court will be bound by Sirius under Golsen, while outside circuits the IRS is likely to continue litigating for a functional or Soroban-like approach until the conflict is resolved or guidance is updated.

Illustration: Simple Example

Assume a Texas LLLP with:

· GP entity with a small interest and limited liability,

· Several individual limited partners with limited liability under Texas law, each providing substantial services,

· Distributive shares of partnership income and separate guaranteed payments for services.

Under Sirius in the Fifth Circuit, the distributive shares allocable to the limited partners (and arguably some or all of the GP interest if treated as a limited partner under state law) should qualify for the Section 1402(a)(13) exclusion from SE tax, while guaranteed payments remain subject to SE tax.

Have an IRS Tax Problem?

Contact the Tax Lawyers at

Marini & Associates, P.A.

for a FREE Tax HELP Contact us at:
www.TaxAid.com or www.OVDPLaw.com
or Toll Free at 888 8TAXAID (888-882-9243)

Sources:

1. https://www.hklaw.com/-/media/files/news/2026/fifthcircuitopinion_siriussolutionsvcommissioner.pdf?rev=aff908d4a3e744859aeea327f3479fdf&hash=ED705A122BB432AC39D17C28DE6DA51F

2. https://www.proskauertaxtalks.com/2026/01/fifth-circuit-in-sirius-solutions-reverses-tax-court-and-exempts-limited-partners-from-self-employment-tax/

3. https://www.stinson.com/newsroom-publications-update-on-limited-partner-exception-to-self-employment-tax-liability-fifth-circuit-decision-revives-the-issue

4. https://www.ca5.uscourts.gov/opinions/pub/24/24-60240-CV0.pdf

5. https://www.cbiz.com/insights/article/fifth-circuit-court-of-appeals-hands-irs-defeat-in-limited-partner-definition-case

6. https://klehr.com/publications/fifth-circuit-rules-that-all-limited-partners-having-limited-liability-are-exempt-from-self-employment-tax-even-if-they-participate-in-management/

7. https://tax.thomsonreuters.com/news/expert-unpacks-whats-next-after-sirius-solutions-decision/

8. https://www.sullcrom.com/insights/memo/2026/January/Fifth-Circuit-Overturns-Tax-Court-Limited-Partner-Case-Sirius-Solutions

9. https://www.troutman.com/insights/fifth-circuit-overturns-tax-court-ruling-in-favor-of-the-taxpayer-in-case-evaluating-standard-for-limited-partner-exception-to-self-employment-tax/

10. https://www.santabarbara.courts.ca.gov/forms-filing/local-rules

11. https://www.texaslawblog.law/2026/01/the-fifth-circuit-defines-limited-partner-for-purposes-of-the-1402a13-exception-to-self-employment-tax/

12. https://static.e-publishing.af.mil/production/1/af_ja/publication/dafi51-201/dafi51-201.pdf

13. https://www.winston.com/en/blogs-and-podcasts/tax-impacts/5th-circuit-gives-taxpayers-sirius-victory-in-self-employment-tax-case

14. https://ccresourcecenter.org/state-restoration-profiles/tennessee-restoration-of-rights-pardon-expungement-sealing/

15. https://www.law360.com/tax-authority/federal/articles/2436546/5th-circ-ruling-clarifies-tax-rules-for-limited-partners

Monday, February 2, 2026

IRS Corporate Audits in 2026: What LB&I’s New Rules Really Mean for Your Company

The IRS has rolled out significant changes to its Large Business & International (LB&I) audit procedures — reforms that aim to speed up examinations and improve efficiency, but also shift new responsibilities onto corporate taxpayers. Here are three major aspects companies should keep in mind.

1. Elimination of the Acknowledgment of Facts (AOF) Process

The IRS has scrapped the Acknowledgment of Facts (AOF) process, previously intended to formalize agreement on the facts before issuing a Notice of Proposed Adjustment (NOPA). Treasury determined the step added time but little value, as companies often resisted confirming facts without knowing how the IRS planned to apply them legally.

Practitioners generally support the change, but warn that taxpayers now bear more responsibility for making sure all relevant facts are on the record. If a company introduces new information after the NOPA, the issue may be sent back to exam, delaying the appeal.

In short, corporations should proactively document and present all favorable facts early, even if they seem only potentially relevant, to avoid future procedural hiccups.

2. Expansion of the Fast-Track Settlement (FTS) Program

LB&I’s Fast-Track Settlement (FTS) process will now be open to a broader range of cases and stages in an audit, giving taxpayers more chances for early resolution. Many see this as a positive step toward reducing prolonged disputes and encouraging collaboration.

However, practitioners are concerned about unclear boundaries — such as which issues remain excluded (e.g., docketed cases, designated litigation matters) and how consistent acceptance criteria will be applied across teams. The ABA has urged the IRS to publish a tiered list clarifying what issues qualify and why, to make the process more predictable.

Taxpayers considering FTS should be prepared to settle in good faith, as the process works best when both sides are truly ready to resolve disputes rather than merely test arguments.

3. Confidentiality and Evidence Concerns Under Rule 408

Even with its expansion, some companies remain hesitant to participate in FTS because of uncertainty surrounding Federal Rule of Evidence 408 - which protects statements made in settlement negotiations from being used later in litigation.

The ABA and several practitioners have urged the IRS to formally confirm that FTS discussions and materials qualify as protected settlement communications under Rule 408. Without that assurance, taxpayers risk revealing legal positions or factual arguments that the IRS could later incorporate into new adjustments.

Until the IRS provides clarity, companies should weigh carefully how much to reveal in fast-track proceedings — balancing the goal of resolution with the need to preserve litigation strategy.

Bottom Line

These audit reforms signal the IRS's intent to streamline examinations and promote early settlements, but they place more responsibility on taxpayers to control the factual record and navigate evolving settlement parameters.

Corporations undergoing exams in 2026 and beyond should adjust their audit strategies, ensure facts are fully developed early, and monitor forthcoming IRS guidance on settlement process protections.

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