I entered IRS's electronic lair today. I paid our second installment of 2006 estimated taxes via the agency's Electronic Federal Tax Payment System, aka EFTPS.
For many years, I've written these checks and dropped them in the mailbox, usually on the deadline day (the 15th of April, June, September and January). That was particularly appealing back when there was check float, the actual time -- days even! -- it took checks to clear. But Check 21 did away with that and I've since become a devotee of online bill paying.
I ramped up my e-money management this year, finally e-filing our 1040. We got a refund, and I had Uncle Sam directly deposit it into our checking account. So taking this step the other, paying direction was a natural progression.
Overall, I'm pleased with the process. Of course, this is the first time I've used the system and the actual transfer of funds hasn't happened yet. I scheduled it for Thursday's due date. I'll let you know if it does indeed go through as planned.
In the meantime, I have a few observations.
If you're totally committed to paying your taxes at the very, very,
very last minute, EFTPS is not for you. Whereas you can wait until the
actual due date and drop your old-fashioned check into a snail mail box
(in time to be postmarked that day), you have to plan slightly ahead
You've got to get your e-payment scheduled, if not actually debited from your account, or "settled" as the IRS refers to it, at least one day before the tax is due. On that preceding day, you also have to enter the transaction request before 8 p.m. Eastern time, regardless of what time zone you're in.
You can, however, do what I did and tell the IRS not to take your dough until the actual due date.
A note to business filers: Same-day payment is available for you, but you'll need to make arrangements with your financial institution beforehand.
The EFTPS Web site also says you can schedule payments up to a year in advance. OK, I thought. I'll give that a try.
I wanted to arrange my June and September estimated tax payments. I plugged in the same amount (as per the four equal installments that the IRS prefers), entered 6/15/2006 and 9/15/2006 and tapped Enter. I immediately got a notice that there was a problem with one of my requested payments.
The program informed me that I was making a duplicate payment.
Duplicate amounts, yeah. Again, four equal 1040ES payments. Duh! But on different days! Get with the program EFTPS software!
I had the option to override the warning and OK the redundant payment or void it. I went with cancel, just in case the IRS thought I'd authorized it to take twice what I want debited on Thursday.
I did call the IRS to report the problem. They knew. The agency rep also told me that it was the form, not the dollar amount, that the program was stumbling over. It saw 1040ES twice and thought I had mistyped the second payment. All I needed to do, the IRS guy said, was override it and re-send.
Maybe it's from years of being told NOT to hit Enter again when making online purchases or I'd be double billed, but I just couldn't bring myself to do the override thing, even with IRS assurance that it would work. I'd be more assured if the IRS got one of its programmers to tweak the computer code so that this doesn't happen.
So I'll be back online on Sept. 13 or 14 to make my third 2006 1040ES payment.
Also, I found the initial payment page a bit confusing. You're asked to enter the form associated with your payment. There's a block to type in the form yourself or a couple of drop-down menus. 1040ES was not listed in either menu, so I put that in the first box.
I was told that form wasn't an option. But I knew it was. So I went to the first drop-down menu, which had 1040 or 1040 separate assessment/innocent spouse as the only options, and clicked 1040. Then I was sent to the actual payment page, where I could specify 1040ES. Why make me wait until I got there?
But here's my absolute favorite goofy thing about the EFTPS enrollment process: You have to wait for your PIN that lets you access the system to arrive by the U.S. Postal Service!
When you sign up, you're told this could take up to 15 business days. Why isn't this instantaneous? You're on a secure connection and you've electronically told the IRS all your personal banking data. Why can't the IRS tell you your PIN?
The agency should be able to shoot you off the number right then and there. Heck, I get new passwords for various subscriptions and accounts every day.
I initiated the EFTPS process on May 26. I got the PIN on June 12. Eleven business days. In time to use it for this estimated tax payment. But same-day access would have been really nice.
The IRS has been using the electronic payment program for a couple of years, but it's just now starting to push it. So maybe these glitches will be worked out as more of us participate.
Or maybe the IRS will just think I'm too picky!
Today's Tax Tip: If you make estimated tax payments and want a refresher on the process, check out this story I wrote for Bankrate.com.
You can drop your second 2006 installment check and 1040ES voucher in the mail on Thursday. But you can go to the EFTPS page today to sign up so in September you can join me in the cyber tax payment world. You can get more information on the system here.
For those times when the hubby and I end up owing on April 15, the
EFTPS should come in handy. We'll still have to pay to file
electronically, but we won't face that 2.5 percent service fee added to
any credit card tax payments you make.
That means I'll be able to instead use that surcharge amount to keep my Starbucks prepaid charge card full!