Online Payments by Individuals And Businesses     

In another innovation brought about by the internet revolution, both individual and business taxpayers now will be able to pay their taxes online, via an online IRS web site - http://www.eftps.gov - that was launched on September 6th. The IRS predicted that this use of the internet will harbinger a significant move to a culture of greater online interaction between taxpayers and the agency.

• Comment:  Although now available to all taxpayers, online payments will most likely benefit businesses and self-employed taxpayers who generally must make multiple payments to the IRS on a regular basis throughout the year.

EFTPS

Since 1996, some business taxpayers have used the Electronic Federal Tax Payment System (EFTPS) to make payments electronically. Businesses with annual employment tax deposits of more than $200,000 are required to utilize EFTPS. They have accessed EFTPS via special software or by telephone.

• Comment:  About 2.5 million taxpayers have been using EFTPS since 1996 and the IRS reported it has collected more than $5 trillion.

The program also enrolls about 6,000 new business taxpayers each week. Business taxpayers can pay income, employment, excise, and other taxes through EFTPS. The program also permits bulk and batch filing. Business taxpayers required to make payments electronically that fail to participate in EFTPS are subject to a 10 percent penalty. Voluntary business participants in EFTPS are not subject to penalty. If a business taxpayer's deposits fall below the threshold for participation, it is still generally required to continue making payments electronically.

In October 2000, the IRS tested EFTPS online. Now, all taxpayers - individuals and businesses - regardless of the size of their deposits can make payments through the online version of EFTPS.

Online features

To use EFTPS online, taxpayers will first need to enroll in the program. The IRS will assign them a unique personal identification number and a password. The password will enable taxpayers to enter the web site and, by following navigational prompts, they can make payments, such as estimated tax payments or to par a balance due on their return.

Payments may be scheduled in advance. Business taxpayers can schedule payments 120 days in advance and individual taxpayers can schedule payments 365 days in advance. The online version of FTPS will be available 24 hours every day/365 days a year.

In addition to making payments, taxpayers can review their payment history and check the status of their payments. Taxpayers also can cancel payments through the internet.

Security

Taxpayer confidentiality will be maintained by special security measures. The IRS explained that the web site was designed with state of the art defenses to protect taxpayer privacy. The system contains multiple safeguards to keep information available while at the same time protecting it from unauthorized use, compromise or contamination. Passwords an personal identification numbers add an other layer of security to correctly authenticate the user.

• Comment:  Every online payment will generate a unique payment number. Taxpayers can choose to print this information to keep a written record of transactions.

For more information, visit http://www.eftps.gov or call 800-555-4477 or 800-945-8400.

Or visit our Frequently Asked Questions page.