A possible future IRS revealed with EFTPS

There's plenty of interesting tax news this week for those of you who enjoy keeping up on the activities of the IRS.  

First, for Internet-savvy taxpayers who aren't afraid to give their credit card numbers online, the IRS is now accepting payments of income taxes on the Internet with its EFTPS, otherwise know as Electronic Federal Tax Payment System.  

The EFTPS service has been around for a few years, accepting payments by phone, but now it has more modern features and is accessible right on the Internet at www.eftps.gov. The IRS is going all out to promote this service and familiarize taxpayers with this option well in advance of next spring's busy tax payment season.  

Not only can you make tax return payments using the EFTPS online service, but you can make estimated payments online too. And if that's not exciting enough, you can even arrange to make automatic estimated payments online. Loosely translated, this means that you give the IRS your bank account number and the IRS reaches in to your account once a quarter and takes out the amount you've authorized for your estimated payment. You can set up this automatic estimated payment program a whole year in advance, which may be useful if you're the type who forgets when your quarterly payments are due.  

Occasionally I worry about the type of power we give the IRS by authorizing the tax service to access our bank accounts. How long will it be before the federal government doesn't wait for us to say how much we want it to take out of our accounts and just helps itself to our funds? In effect, that is being done already with the current system of tax withholding from paychecks.  

Whatever your feeling about using the Internet and paying the IRS, one can't help but appreciate the fact that the EFTPS service is available 24 hours a day, seven days a week, with no busy signals and no confusing telephone representatives. When you make an online payment, you get instant feedback regarding the acceptance of your payment, along with a dated receipt that you can print.  

The EFTPS also offers a payment history service in case you need a reminder of when your payment was made. The payment history service provides four months of history.

IRS Gets Access to Social Security Benefits

In other IRS news this week, the IRS has been given the right to withhold past due taxes from Social Security recipients.  

Claiming that over 232,000 taxpayers currently receiving Social Security benefits owe back taxes, the IRS has decided to go forward with a program that was actually authorized by Congress several years ago. Concern over the reaction to such a measure kept the IRS from taking this money before now, but it appears that the tax collection service feels the time is right to start a more aggressive approach to collecting past due amounts.  

Social Security recipients owing past due income taxes will be notified in November that a portion, up to 15%, of their benefits will be routed to the IRS to make up the shortfall. The taxpayers (or should they be called non-taxpayers?) will have an opportunity to make amends with the IRS or set up a payment plan. If no agreement is reached regarding payment of the taxes, the IRS will begin withholding back taxes in February 2002.