IRS Form 433-D: How to Set Up Installment

IRS Form 433-D featured image

IRS Form 433-D is a short form used to finalize a Direct Debit Installment Agreement (DDIA) with the IRS. It authorizes the IRS to automatically withdraw monthly payments directly from your checking account.

It’s important to note: this is not the form to request a payment plan. To apply, you must first use:

Once the IRS approves your request, Form 433-D is used to set up the direct debit arrangement.

Why Direct Debit Matters

A Direct Debit Installment Agreement (DDIA) is often preferred because:

  • It reduces the risk of defaulting on payments.

     

  • It may qualify you for a lien withdrawal once a set number of payments are made.

     

  • It carries lower setup fees than non-direct debit payment methods.

     

For larger balances, the IRS requires direct debit:

  • Individuals: If you owe more than $25,000, direct debit is required.

     

  • Businesses: If you owe more than $10,000, direct debit is required.

Short-Term vs. Long-Term Payment Plans

The IRS offers two main options:

  • Short-Term Plan: Pay in full within 180 days. No Form 433-D required.

  • Long-Term Plan (Installment Agreement): Pay over more than 180 days. If balances exceed the thresholds above, direct debit via Form 433-D is mandatory.

User Fees for Payment Plans

The IRS charges setup fees:

  • Online Direct Debit: $31

  • Online, Non-Direct Debit: $130

  • By phone/mail/in person (Direct Debit): $107

  • By phone/mail/in person (Other methods): $225

Low-Income Taxpayers: May qualify for reduced or waived fees by filing Form 13844.

How to Complete Form 433-D

When filling out Form 433-D, you’ll provide:

  • Bank routing and account numbers

  • Monthly payment amount

  • Payment due date (typically the same each month)

  • Tax periods covered by the agreement

The IRS will send written confirmation once the form is processed, along with the first scheduled withdrawal date.

Benefits of Using Direct Debit

  • Convenience: Payments are automatic.

     

  • Reduced Fees: Direct debit setup fees are lower.

     

  • Lien Withdrawal Potential: If you owe less than $25,000 and make three consecutive direct debit payments, you may request that a filed federal tax lien be withdrawn.

     

  • Peace of Mind: Lowers the risk of missed payments and default.
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