Payment Withdrawal

[Corduroy Frog]

I arranged for "Bob" to pay his tax liability ($3000) with a bank draft to occur on 04/15.  Didn't happen.  Bob says all that happened was a $30 charge from the credit union for a disallowed check. 

Here's why (I think). 

On such planned withdrawals, Drakes asks us to designate "checking" or "savings."  I indicated checking, as the taxpayer did not indicate any other preference.  "Bob" says he put $3000 in savings for the IRS to take.  When confronted with a draft, most banks/creditunions will transfer the money to checking so long as there are funds in savings to cover.

This credit union did not.

These are the facts.  My question now is "What should the taxpayer do to pay the IRS?"  Will there be a collection letter forthcoming?  Will the IRS try again?  If so, when??

"Bob" is waiting for me to tell him what to do.  To be honest, I don't know.

[Lion EA]

Send him to IRS's Direct Pay immediately. He gets an instant confirmation of payment. You can calculate his P&I to pay, or he can wait for the IRS letter with P&I.

[Corduroy Frog]

Thanks Lion.  I have provided him with the Direct Pay website.  I hope he knows how to use it.

[Catherine]

Direct Pay is pretty easy.

[Pacun]

https://www.irs.gov/payments/direct-pay-with-bank-account

Edited April 25 by jklcpa
fixed the link

[jklcpa]

@Pacun  and everyone,  I fixed the link so that it now goes to the official IRS page for direct pay.

[jklcpa]

On 4/23/2025 at 1:12 AM, Corduroy Frog said:

When confronted with a draft, most banks/creditunions will transfer the money to checking so long as there are funds in savings to cover.

This credit union did not.

You already received the best answer is to have client use IRS' Direct Pay.

About the above statement, don't ever assume that a bank or credit union offers overdraft protection or that the account is of the type that even has that set up.

[Corduroy Frog]

23 hours ago, jklcpa said:

About the above statement, don't ever assume that a bank or credit union offers overdraft protection or that the account is of the type that even has that set up.

The bank or credit union has the option of doing so.  If this had happened to me at my credit union, they would have automatically covered from savings.  Ironically enough, "Bob" has the same credit union that I have.  Go figure.

 

[jklcpa]

1 hour ago, Corduroy Frog said:

The bank or credit union has the option of doing so.  If this had happened to me at my credit union, they would have automatically covered from savings.  Ironically enough, "Bob" has the same credit union that I have.  Go figure.

 

My bank has that option for certain accounts, but the account holder must set up that feature, kind of like setting up the online bill pay or online banking for statements. The account I have doesn't have that feature available, and I don't have a savings account there anyway because their products aren't worth investing in. 

[Gail in Virginia]

My credit union will cover from savings, but they won't transfer online from savings more than 3 times in 30 days.  So if I have made transfers online, or they have had to cover another payment, the third time that month that this happens, they will refuse the transaction.  They told me it was federal law - at least the last time I tried to make too many online transfers in one month which has admittedly been several years ago.  

[Randall]

I usually don't like to set this up too close to the filing deadline.  If eary on, I do it for a few client who request it.  Most of my clients are ok with refunds being directly deposited but if they owe, they choose to send a check.  We'll see how it goes for next year when they put through the new requirements (or change their minds).

[mcb39]

I had one of these today.  We had designated direct withdrawal from a checking account.  The IRS tried to take it from a Savings Account that didn't have the funds.  Client came in and because of what I read this morning on this board, we went to Judy's link and used Direct Pay; easy as could be.  The client was so relieved.  He said that he hadn't slept at all last night over this.  Thanks to all of you who contributed your experiences.  Before today, I didn't know about Direct Pay.  This board is the BEST.

[Lion EA]

https://www.irs.gov/payments/direct-pay-help

[Lee B]

That's why I am signed up for all of the IRS email notices and alerts.

Even though a number of them don't apply to my practice, they keep me informed