An overview of IRS electronic payment options.

• Author: Hurtt, Kristy

With the e-filing of tax returns becoming more and more prevalent, practitioners and their clients should also take advantage of other electronic services that the IRS has introduced in recent years. These include the Electronic Federal Tax Payment System (EFTPS), electronic funds withdrawal, and payment by credit or debit card. This article discusses the requirements and advantages of these electronic services.

EFTPS

Practitioners know that e-filing tax returns has advantages: It documents the filing date, reduces time at the post office, and saves postage. For additional convenience, consider having business and individual clients enroll in the IRS's free electronic payment program, known as EFTPS. EFTPS allows businesses and individuals to pay federal taxes via the internet or over the phone. It eliminates the hassles of writing checks and taking them to a financial institution or mailing payments to the IRS; payments are withdrawn directly from an enrolled bank account.

Other benefits include:

* Tax payments can be made securely from home or office, 24 hours a day, 7 days a week.

* Payments can be made from any place that has a phone or an internet connection.

* Payments can be scheduled up to 120 days in advance for businesses and 365 days in advance for individuals, including estimated tax payments. Payments can be made daily, weekly, or monthly.

* The IRS does not have access to the business's or the individual's account.

* Scheduled payments can be canceled up to two business days in advance of the settlement date.

* Up to 16 months of EFTPS payment history can be accessed online or by phone.

* Every EFTPS transaction receives an immediate electronic funds transfer acknowledgment number that is a receipt of the transaction.

* EFTPS uses the highest level of security available online.

The EFTPS option is available for the payment of tax due on individual returns, including Form 1040, U.S. Individual Income Tax Return, Form 1040-ES, Estimated Tax for Individuals, and Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return. It is available for the payment of tax due on business returns, including Form 1041, U.S. Income Tax Return for Estates and Trusts, Form 1120, U.S. Corporation Income Tax Return, Form 1120S, U.S. Income Tax Return for an S Corporation, and Form 7004, Application for Automatic Extension of Time to File Certain Business Income Tax, Information, and Other Returns. It can also be...