What happens to an IRS installment agreement if the company folds?

An IRS installment agreement is added to the total debts your company owes when it folds. If you are not declaring bankruptcy, you will have to pay the installment agreement in full prior to closing your business books. If you are declaring bankruptcy, then a judge will determine the order of importance of your debts. IRS debt is the most senior form of debt. Judges are instructed to force the repayment of this debt, typically by liquidating your business assets, prior to allowing you to repay any other loans. If the IRS debt is in your name rather than the business name, you may remain liable even after the bankruptcy has been resolved on the business end.

For more info, read Why You Should Avoid the IRS Installment Agreement.