Tax Tip: Make Estimated and Other Tax Payments Electronically

In November 2021, members of a CPA Academy course participated in a survey, analyzing how they instructed their clients to pay their estimated taxes. Options included:

• Via check with a form 1040-ES;
• Via direct pay on www.irs.gov;
• Via www.eftps.gov (the Electronica Federal Tax Payment System); and
• Through their tax software.

Of the first 1,014 responses, 37% were still instructing their clients to pay by check. Similarly, 36% of the remaining 350 respondents answered in the same manner.

With the clear admissions by the IRS that they are unable to open all the mail and with many anecdotal stories of lost checks and unapplied payments, it is alarming that over one-third of practitioners haven’t moved the bulk of their clients to electronic payments. Of course, the IRS could also improve its www.eftps.gov system to enable clients to pay more easily in a manner more convenient for some taxpayers, such as weekly or monthly.

In today’s landscape, every firm in the tax industry should have a policy to strongly encourage clients to make payments electronically. It is a secure, efficient and quick method. And, as indicated by the inquiry above, there are at least three excellent alternatives in doing so.

This column does not necessarily reflect the opinion of The Bureau of National Affairs, Inc. or its owners.

Author Information

E. Martin (Marty) Davidoff is the Partner-in-Charge at National Tax Controversy Practice of Prager Metis CPAs, a member of Prager Metis International Group. He has been practicing in the accounting industry for over 40 years. Marty is a renowned expert in IRS and state tax controversy resolution as well as state and federal income tax matters and federal tax lien withdrawals. In addition, Marty is experienced in business startups, tax planning for both individuals and businesses, and the taxation of S-corporations and limited liability companies.

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