If your practice serves exempt organizations, you've probably fielded this question from a client: "Why can't I just pay this through IRS Direct Pay like I do everything else?" The honest answer is that Direct Pay's current setup wasn't built with exempt organizations' full range of payment scenarios in mind - and it's a gap you likely end up working around manually for clients filing Form 990-T, Form 990-PF, Form 4720, or Form 1120-POL.
The AICPA has now formally asked the IRS to close that gap. In a letter submitted to the Internal Revenue Service, the AICPA recommended expanded electronic payment options for exempt organizations through IRS Direct Pay, specifically covering these four forms.
Why This Should Be on Your Radar
For practitioners, this isn't just a system-maintenance footnote - it's directly tied to client experience and your own workload. Every time a client's payment gets misapplied because a form wasn't selectable in Direct Pay, that's a notice to interpret, a call to the IRS to make, and time you're spending on cleanup instead of advisory work. The AICPA's recommendations, if adopted, would reduce exactly that kind of friction.
What the AICPA Is Recommending
The letter asks the IRS to modify Direct Pay in four specific ways:
- Add Form 990-T and Form 990-PF to the "Apply Payment To" dropdown when "Extension" is the selected "Reason for Payment."
- Add Form 990-T and Form 990-PF to the "Apply Payment To" dropdown when "Payment on Adjusted or Amended Return" is selected.
- Add Form 4720 and Form 1120-POL to the dropdown across three payment reasons: "Balance Due on Return or Notice," "Extension," and "Payment on Adjusted or Amended Return."
- Update estimated tax payment periods for Form 990-T and Form 990-PF to include the current 2025 tax year.
If implemented, this would give you a reliable, IRS-native electronic option for client payments across nearly every common exempt-organization filing scenario - reducing the need to default clients to EFTPS or paper checks as a workaround.
The Advocacy Rationale - And What It Signals
Scott Klein, Senior Manager for AICPA Tax Policy & Advocacy, framed the ask around efficiency for both practitioners and the IRS itself: refining Direct Pay would improve accuracy and processing efficiency for exempt organization payments, reduce uncertainty and the risk of misapplied payments for clients, and cut down on the follow-up correspondence practitioners currently have to initiate with the IRS.
That last point matters for your practice specifically - less time spent chasing misapplied payments means more billable capacity for actual advisory and compliance work.
What to Do With Clients Right Now
Until the IRS responds, here's how to keep client payments clean in the meantime:
- Audit your current process for each of these four forms - confirm exactly which Direct Pay dropdown combinations work today and which don't, so you're not troubleshooting mid-filing.
- Standardize a workaround (EFTPS enrollment, or documented mail procedures) for the payment scenarios Direct Pay doesn't yet support, so it's consistent across your client base.
- Flag this proactively to exempt-org clients - a short note explaining why a payment method might look different than expected builds trust and heads off confused calls.
- Keep payment confirmations on file for every exempt-org payment, given the elevated risk of misapplication under the current system.
- Track the IRS response - if Direct Pay is updated, your internal payment procedures and client guidance should be updated in step.
Why This Advocacy Effort Matters Beyond This Letter
This is a useful reminder of what AICPA's Tax Policy & Advocacy team does on practitioners' behalf day to day - identifying operational friction points in IRS systems and pushing for fixes before they become larger compliance headaches for members and their clients. Following this issue is also a good entry point if you want visibility into how these advocacy letters typically move from recommendation to (sometimes) implementation.
About the American Institute of CPAs
The American Institute of CPAs (AICPA) is the world's largest member association representing the CPA profession, with 397,000 members and a history of serving the public interest since 1887. AICPA members work across business and industry, public practice, government, education, and consulting. As a founding member of the Association of International Certified Professional Accountants, the AICPA sets ethical standards for the profession, attestation standards, and U.S. auditing standards for private companies, not-for-profit organizations, and federal, state, and local governments.
