The IRS Direct Debit Installment Agreement (DDIA) allows you to pay off your tax debts using your bank account. The direct debit can be set up with multiple Installment Agreements such as Guaranteed, Streamlined, and Verified Financial Installment Agreements.
You can use the IRS Online Payment Agreement Application when setting up a direct debit installment agreement. All you need to do is include a routing and account number in Section 13 of that form. Direct Debit Installment Agreements provides more advantages than disadvantages.
IRS Direct Debit Installment Agreement Benefits
Using the Direct Debit option will help you avoid penalties along with other benefits:
- The set up fee for the Direct Debit Installment Agreement through IRS Online Payment Agreement (OPA) is a lot cheaper. It costs $31 for OPA while $107 for other set up methods.
- You will avoid any delays in payments since the payment will be taken out directly from your bank account
- This is stress-free method because you don’t have to mail this and pay for postage every month. This also means not having to worry about lost mail and misplaced payments
- You don’t have to pay for credit card charges
- When you owe less than $25,000, you can have your IRS liens withdrawn from your credit after the third month
- If a business has a tax debt of $25,000 then you can qualify for the Streamlined Installment Agreement
- If you owe between $50,000 to $100,000, you may obtain up to an 84-month streamlined installment agreement
- If you owe between $25,000 and $50,000, an IRS lien will not be placed on your credit
IRS Direct Debit Installment Agreement Disadvantages
Just like any other payment methods, the IRS Direct Debit Installment Agreement also has a drawback, too. If you have insufficient funds in your account, you will have incurring overdraft or insufficient fund fees
In general, the Direct Debit Installment has plenty of benefits compared to other installment payment types.