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Utilizing an IRS installment agreement is often necessary if you are unable to pay your taxes in full for the year. The Direct Debit Installment Agreement is one program that the IRS offers for your convenience in this matter. Here are the basics of the Direct Debit Installment Agreement and some of the benefits associated with it.
The Direct Debit Installment Agreement
The Direct Debit Installment Agreement is a program that you set up with the IRS in order to pay your tax bill on an installment basis. It is designed to help you avoid it any penalties with the IRS if you do not have the necessary money to pay your taxes at the end of the year. This presents you with a way to catch up on your tax liability.
Convenience
One of the major benefits that this program provides for you is convenience. With this program, you will set up a direct debit out of your account that will go directly to the IRS. This means that you will not have to manually write a check and mail it in order to fulfill your obligations.
Avoid Forgetting Payments
Many people have a hard time bring when to send the IRS a payment for their installment plan. With this program, that will no longer be an issue. The payment will come out of your account automatically each month, and therefore, you will not have to worry about any late fees or further action from the IRS.
Lower Fees
The fees associated with the Direct Debit Installment Agreement are actually lower than the fees associated with other types of installment agreements with the IRS. When you pay with a typical installment agreement, the fee will be $105. When you use the Direct Debit Installment Agreement you will actually only have to pay $52 for the service.
Less Chance of Spending the Money
If you are in charge of manually sending in your payment each month or quarter, there is a greater chance that you will spend the money that you need on something else. When the IRS deducts the money automatically, you will not have to hold in your account and be tempted to spend it on other things.
Faster Processing
Another benefit of utilizing the Direct Debit Installment Agreement is that the processing of your payment will be much faster. With this system, there is no manual payment posting involved by IRS employees. This means that as soon as the payment is deducted from your account, it will be automatically posted to your account with the IRS. Therefore, there will be no chance of getting a late fee because it took too long to process your payment.
Less Risk of Default
Individuals that utilize this program have proven that there is a much lower rate of default when using it. People that use traditional installment agreements have a much higher rate of default on their tax liability. This can result in wage garnishments, property seizures, and even jail time.
