Installment Agreement

What it does

Form 433-D records an installment agreement: what you owe, how much you pay each month and on what day. It also lets you set up direct debit from a bank account. An IRS employee often fills in part of it, and you sign and return Part 1 to the address on the letter that came with it.

When people use it

• The IRS sends it to finalize a payment plan you worked out with collection staff.
• You want your monthly payments taken automatically from a bank account.

Before you file

• Pick a payment day between the 1st and the 28th. It must be the same day every month, and the IRS must receive payment by then.
• For direct debit, give your routing and account numbers or attach a voided check.
• Check the user fee. Under the July 2024 form, it is $178 without direct debit and $107 with it. Low-income taxpayers pay $43, which is waived with direct debit, and lower fees may be available online.

What to watch for

• Penalties and interest keep adding up until the balance is paid.
• You must file all returns and pay new taxes on time while the agreement is in effect, and the IRS keeps your refunds and applies them to the balance.
• The IRS can end the agreement if you miss payments, fail to pay other tax when due or do not provide financial information it asks for. It can then levy your income, bank accounts or other assets.
• If the IRS reinstates a defaulted agreement, the reinstatement fee is $89 ($43 for low-income taxpayers).
• The form shows whether a Notice of Federal Tax Lien has been filed, will be filed or may be filed if the agreement defaults.
• To stop a direct debit, contact your bank at least 3 business days before the next payment, or the IRS at least 14 business days before.