Do your clients make tax payments? If so, the U.S. Department of the Treasury wants to talk to you about the benefits of paying taxes electronically.
Simplify is a national campaign launched to communicate to tax professionals and small businesses the benefits of paying taxes electronically using the Electronic Federal Tax Payment (EFTPS). EFTPS enables tax professionals, accountants, businesses and individuals to pay federal taxes electronically, including corporate, excise and employment taxes and 1040 quarterly estimated tax payments. EFTPS offers a variety of payment options including the Internet and a telephone voice response system, as well as other electronic solutions for tax preparation and planning firms of all sizes.
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EFTPS was introduced in 1996 and has been used to make more than 528.5 million payments totaling over $12.5 trillion. In September alone nearly 6 million payments were processed totaling more than $191.5 billion. More than 1 million of the payments received in September were made online accounting for over $26 billion. September also experienced the largest on-day dollar amount received when $68,782,562,680 was collected on September 15.
“Although EFTPS serves a growing number of taxpayers who recognize it as a reliable, secure and convenient method for doing business with the government, far too many tax preparers and small businesses still use paper coupons,” Donald Hammond, Fiscal Assistant Secretary said in a prepared statement. “Simplify will enable us to build on the recent successes of EFTPS and help encourage additional taxpayers to use the service.”
Tax professionals can find more information online in A Guide for Tax Preparers. Guides can only provide so much information, however. To really understand what the system has to offer CPAs and tax professionals working for small and mid-sized firms, it’s best to hear from someone like you who is using it.
“It is a wonderful tool to have on hand and makes your life easier, especially if you do payroll,” Adewale Akingboye, a sole practitioner at Ade Accounting & Consulting, said. “Most clients are not aware this is possible. You have to present the benefits to clients before they become interested, especially the benefit about not incurring penalties for late payments.”
Akinboye first heard about EFTPS three years ago. It was immediately apparent to him that it would eliminate the headache of sending forms, so he tried it with one client and saw the benefits right away.
“It is a good tool for selling new clients. The convenience and accuracy it brings to filing payments is tremendous,” Akinboye said. “The ability to make payments to prior years is a huge advantage, as is using it to beat filing deadlines and save clients penalties.”
The Department of the Treasury chose to launch the Simplify program now so that it would be in place for the 2006 filing season. Since the EFTPS system is already operational, it can even be used for payments due on December 15, 2005 according to Gary Grippo, Assistant Commissioner, Federal Finance.
“In 2005, 68.4 million tax returns were filed electronically through IRS e-file. IRS now receives more returns electronically than on paper. This breakthrough shows increased public interest in electronic interaction with the government,” Kevin Brown, IRS Commissioner, Small Business/Self-Employed Division said in a prepared statement about the Simplify campaign. “The Simplify campaign exemplifies a wider effort by the Treasury to serve an increasingly wired public through a variety of electronic filing and payment processes, including IRS e-file, e-pay and e-services.”
Grippo confirms that the long-term strategic goal is an all-electronic Treasury, but no specific deadline has been set for that transition. Simplify is the first step and the Treasury is committed to the EFTPS system for this year and next after which it will be evaluated to ensure it is doing what it was intended to do for the next five years.
When asked what accountants at small and mid-sized firms should know about EFTPS, Grippo replied “we want them to know what the benefits are: 24/7 availability, immediate acknowledgement of payment from the IRS, that payments are 31 times less likely to experience a penalty for late payment or errors, and that it gives accountants a new service to sell to both new and existing clients.”