You’ve completed the arduous tasks and seemingly endless paperwork – now you have an IRS payment plan to address your tax debt. Finally, your tax debt can be pushed to the back of your mind. Just make your monthly payment and stay in compliance with the terms of your payment plan. Setting up a Direct Debit Installment Agreement (DDIA) with the IRS takes the task of sending those payments off your plate.
What is a Direct Debit Installment Agreement?
A DDIA is a method of making your monthly payment to the IRS, where your payment is automatically withdrawn from your bank account on the same day each month. You may be familiar with this concept from having your mortgage, rent, or credit card payments set up for automatic payment.
What are the Benefits of a Direct Debit Installment Agreement?
There are several benefits of a DDIA, including saving you the time of making monthly payments yourself. When you agreed to an IRS payment plan, one of the terms was that you needed to make your payments on time. DDIA reduces the risk of missed payments, whether you forgot, the payment was lost in the mail, or some other issue. Missing even one payment can result in the IRS canceling your plan and pursuing collection against you.
There are also financial benefits of setting up a DDIA. When you have a DDIA, your initial setup fee for making payments is $22; without a DDIA, the setup fee for your payment plan is $69.
How to Set Up Your Direct Debit Installment Agreement
The IRS has made setting up your DDIA as simple as possible. Your first step is to create an account on Direct Pay and pay your $22 setup fee. When you’re in Direct Pay, you will need to enter your bank information, including the account number and routing number. You’ll then select a monthly recurring payment date.
While online is the easiest method for setting up your DDIA, you can also mail an Installment Agreement Request (Form 9465) to the IRS. If you need help setting up your DDIA or have any questions or concerns about your IRS payment plan, Highland Tax Group is here to help.