Direct Pay – A New Way to Pay Your Taxes
In late spring of this year, the IRS began a new service called IRS Direct Pay that is now open to individual taxpayers who owe tax for prior tax years or wish to pay current year estimated tax.
The online service, available since late this past spring, can be easily accessed at www.irs.gov/Payments/Direct-Pay.
Direct Pay is apparently catching on, as it has already received more than one million tax payments totaling over $1.7 billion, the IRS said recently.
"Direct Pay is the latest addition to our growing array of online tools designed to serve taxpayers better," said IRS Commissioner John Koskinen. "Direct Pay simplifies the payment process, enabling people to quickly and easily make a secure payment from the convenience of a home computer."
Specifically, IRS Direct Pay enables individuals to electronically pay their tax bills or make quarterly estimated tax payments directly from checking or savings accounts. No fees are required.
Direct Pay is similar to the older Electronic Federal Tax Payment System (EFTPS) but unlike EFTPS, Direct Pay doesn't require a registration process. Instead, the IRS uses an identity verification process based on information in one of your prior year processed tax returns.
In step two of the Direct Pay process, you will simply select the Tax Year for Verification that you would like the IRS to verify against. You can choose one of the last five years for identity verification. Note, however, that all of the information you enter on the Verify Identity page will need to match the tax return you are verifying against.
In addition, the service is open 24 hours a day, 7 days a week to taxpayers making payments toward individual tax liabilities. (Business taxpayers must still make employment tax payments through the older).
One powerful feature of Direct Pay is that you can make a tax payment towards a 1040 tax return for the last 20 years (e.g., 1993 - 2013) for most of the Reason for Payment options.
There are two exceptions: Estimated Tax Payments and Requests for Extension of Time to File. Estimated Tax Payments are paid to the IRS in the current calendar year (e.g., 2014), while Requests for Extension of Time to File payments are generally for the current tax year (e.g., 2013) for which taxpayers can still request an extension.
You can also schedule a future tax payment to be made up to 30 days in advance, although the ability to make recurring payments is not yet available.
For tech savvy taxpayers, or for those who just like the convenience of online bill paying, Direct-Pay can be a convenient, low cost, and low risk (think lost mail) way of taking care of your individual federal tax obligations.
