IRS debuts online tax payment system

The IRS launched a new service Thursday that allows businesses and individuals to pay their taxes online. The Electronic Federal Tax Payment System-OnLine (EFTPS) reduces the burden of paying taxes for citizens and cuts processing costs for the agency, said IRS Commissioner Charles Rossotti. The EFTPS Web site allows taxpayers to make scheduled or estimated payments, features that should be popular with self-employed workers who pay their taxes quarterly. Taxpayers must provide an identification number, a bank account number and a bank routing number when they enroll. Taxpayers will also be able to view their tax payment histories. Rossotti said this is the IRS's first step toward providing taxpayers with a complete view of their tax accounts. When payments are made, taxpayers will receive acknowledgements from the system that will function as receipts. "Now you'll know for sure we got what you sent us," Rossotti said. The receipt feature is actually more important that it might seem, he said. Each year, the IRS gets millions of calls from taxpayers inquiring whether the agency received their payments. IRS's call centers are so busy that operators cannot answer all the calls they receive. Rossotti stressed that the online payment system exceeds the technology industry's security and privacy standards. According to govONE Solutions LP, a subcontractor working on the payment processing system, the IRS does not have access to sensitive data created during enrollment or subsequent payment transactions. "We retain all data," said a company official. "We just give [the IRS] the money and tell them who has paid their taxes." Although the online payment feature of EFTPS is new, the system has been around since November 1996 for large businesses. In its previous format, it required users to either load their computers with special software or call an automated phone system to pay their taxes. EFTPS-OnLine does not accept tax filings or credit card payments. These services are handled by the IRS's e-file system.