IRS Offers Cash Incentives To Boost Number Of Electronic Tax Payments

by Mike Godfrey, Tax-News.com, Washington

26 May 2004

The Internal Revenue Service on Tuesday announced an incentive to encourage enrollment in and use of the Electronic Federal Tax Payment System (EFTPS).

The 'EFTPS-FTD' penalty refund offer allows business taxpayers an opportunity to receive an automatic one-time penalty refund if they have been assessed a deposit penalty on a Form 941, Employer's Quarterly Federal Tax Return. The offer is available to employers who are not mandated to use EFTPS.

“This approach is a sound business decision for both taxpayers and the government,” commented IRS Commissioner Mark W. Everson. “Using the electronic payment system is much more accurate and much less burdensome for taxpayers. At the same time, the government saves money because there are fewer errors, fewer notices and fewer problems.”

Dick Gregg, FMS Commissioner (Financial Management Service), observed: “Paying taxes using EFTPS means almost 20 times greater accuracy. I encourage individuals and businesses to enroll today and save time and money.”

The IRS will look back up to four quarters prior to the four-quarter compliance period for a full paid FTD penalty to abate. Penalties paid earlier than one year prior to the four-quarter compliance period are not eligible for the automatic offer.

EFTPS, a free service, was introduced in 1996 and since that time more than 4.6 million taxpayers have enrolled in the system to make their federal tax payments electronically. In fiscal year 2003, EFTPS processed more than 68.5 million transactions totaling more than $1.5 trillion.

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