In 2021, about 2.4 million Americans established new payment plans with the IRS because they could not afford their entire tax debt bill right away. Compared to 2020, that number is a 29% increase!
There are many reasons why more Americans are struggling to pay their tax debt, and one of them is the extremely delicate financial situation we’re all in right now.
Did you recently receive a tax debt bill that you know you can’t pay off? If so, you’ll want to know all about IRS Form 433 D, also known as the IRS installment agreement form. Learn everything you need to know about this important tax form and how to fill it out correctly below.
What Is an IRS Installment Agreement Form?
Each year, Americans are expected to file their taxes and then pay a fair share of their tax burden. As you’d imagine, quite a few citizens end up receiving their tax bills and then feeling shocked by the total amount they owe. This is especially true when the person has experienced certain life or income changes or started a business.
Regardless of the reason, the IRS expects citizens to pay up in full upon receiving the tax bill.
When taxpayers can’t afford to pay off the full amount in one go, they must communicate that with the IRS. From there, they’ll need to work on a solution. An IRS installment agreement is one type of tax debt relief solution that allows taxpayers to pay off their tax debts in monthly installments while also avoiding further collection efforts from the IRS.
More specifically, an IRS Form 433-D is an installment agreement that involves direct debit transactions. In other words, your monthly IRS payments will immediately come from your bank account when they’re due.
Should You File an IRS Form 433-D?
IRS Form 433 isn’t for everyone. You should file this form if you owe the IRS a significant chunk of money and you can afford to make monthly payments from your bank account.
You shouldn’t fill out this form if:
- You are able to pay off the full tax debt
- You are unable to make monthly payments without enduring a financial hardship
- You disagree with the tax bill you received
- You want to make monthly payments, but not in a direct debit situation
If your situation falls into one of those categories, don’t think you’re out of options! You might have other options available, including filing for currently non-collectible status, innocent spouse relief, or even applying for penalty abatement, which can help you navigate your tax situation without the extra burden of penalties, fees, and interest.
Terms and Conditions You Need to Understand
If you do decide to go with an installment agreement, then it’s important to also note the terms and conditions that come along with applying for this type of financial relief. If you decide to go with this program and you’ve signed the agreement form, you’re bound to pay the outlined amount each month, including any penalties and interest.
Your IRS Form 433-D should include the information about your bank account and the amount that will get deducted out of your account each month. In most cases, payments will start about 60-90 days after completing your form and submitting it either online or via snail mail.
If you fall behind on your payments, you’ll be considered in default with the IRS. This could result in the IRS terminating your agreement entirely.
When you submit IRS Form 433-D, you will be charged a service fee. If you complete the entire process online, you’ll need to pay anywhere from $31 to $149. If you opt to complete your form on paper and submit it via snail mail, you’ll end up paying up to $107 to submit the installment agreement forms.
How to Fill Out IRS Form 433-D
You can fill out IRS Form 433-D either online or on paper. If you opt to fill out the form on paper, then you can utilize our free downloadable tax forms. If you’d prefer to fill out the form online, you can do so directly on the IRS website.
First, enter identifying information like your name, address, Social Security number, phone number, employer information, and the kinds of taxes you filed for. You’ll want to enter the tax periods of the years you owe for and the total overall amount you owe. Write your initials in the provided box and provide your bank routing and account numbers.
What to Do With a Completed IRS Form 433-D
Are you wondering where to mail IRS Form 433-D once you’ve completed it? Mail your form to:
Internal Revenue Service
ACS Support P.O. Box 8208
Philadelphia, PA 19101-8208
Do You Need More Help With Your IRS Form 433 D?
There are countless reasons why someone might receive a tax bill they can’t pay off in full right away. When that’s the case, you should always work with the IRS to discover your best course of action. The absolute worst thing you can do is ignore your tax debt and hope that it goes away. The IRS will inevitably catch up with you. At that point, they may decide to initiate collection efforts against you.
These collection efforts could vary from mild to very extreme. The IRS has the authority to seize your property and garnish your bank accounts.
To avoid this type of situation, all you’ll need to do is fill out IRS Form 433 D and apply for an IRS installment agreement plan. If the IRS approves your plan, then they’ll stop all collection efforts and you’ll once again be in good standing with the tax agency.
Do you have more questions about an installment agreement with the IRS? Do you need help with your tax forms? Regardless of where you stand with the IRS, we can help. Reach out to our office now to get in touch with our team of highly qualified tax experts who can help you meet your financial goals.