IRS Direct Debit Installment Agreement Benefits & Details

IRS direct debit installment agreementSimply put, an IRS Direct Debit Installment Agreement (DDIA) is when you make payments to the IRS directly from your bank account. You can set up a direct debit payment method with multiple Installment Agreements. That includes Guaranteed, Streamlined, and Verified Financial Installment Agreements.

You can set up a direct debit online with the IRS’s Online Payment Agreement application. You can also use Form 9465 (Installment Agreement Request), just include your routing and account number in Section 13 of that form. Direct Debit Installment Agreements offer more pros than cons.

Direct Debit Installment Agreement Benefits

In most cases, paying by direct debit helps you avoid defaulting or incurring penalties. Here are a few of the other benefits

  • Setting up a Direct Debit Installment Agreement costs $31 if set up through the IRS Online Payment Agreement. Otherwise, the setup fee is 149 dollars (if not low income).
  • Direct debit helps you avoid late payments.
  • You are not required to mail a check or pay for postage each month.
  • You don’t have to worry about lost mail or misplaced payments.
  • You avoid fees associated with credit card payments.
  • Generally, when you agree to direct debit, and you owe less than $25,000, you can request to have IRS liens withdrawn from your credit after three months.
  • If your business owes less than $25,000 and you agree to direct debit, you can qualify for the Streamlined Installment Agreement.
  • You can prevent liens in some cases if you owe between $50,000 to $100,000, and your payment method is direct debit or payroll deduction.

Tax Debt Analysis

IRS Direct Debit Installment Agreement Drawbacks

There can be a few drawbacks too. Namely, if you don’t have the funds in your account, you risk incurring overdraft or insufficient funds fees.

In most cases, if you are serious about paying off your tax debt, payroll deductions and direct debit offer more benefits than any other type of payment method for an installment plan.

Disclaimer: The content on this website is for educational purposes only and does not serve as legal or tax advice. For specific information regarding your tax situation, contact a licensed tax professional or tax attorney.