The Office of Legislative
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More Taxpayers Choose Electronic Federal Tax Payment System

Two bureaus of the U.S. Department of the Treasury—the Financial Management Service (FMS) and the Internal Revenue Service—today announce significant growth this year in the use of the Electronic Federal Tax Payment System (EFTPS). EFTPS offers businesses and individuals the convenience of making federal tax payments electronically 24/7 by phone, fax or Internet. Treasury is finding that the growth of its e-commerce services mirrors Internet use across the board.

According to a recent report from the Pew Internet and American Life Project, on an average day, 70 million adult Americans log onto the Internet—a 37 percent increase from 52 million on an average day in 2000. According to the Pew study, 23 percent of users say the Internet has helped them with their finances and 36 percent say it has helped them in dealing with the government. The Internet has reached into and reshaped just about every aspect of modern life, including the way we pay taxes.

The number of taxpayers enrolled in EFTPS continues to climb steadily, and the total tax dollars collected through the system have jumped significantly this year. In 2004, nearly 620,000 taxpayers enrolled in EFTPS, and Treasury collected nearly $1.6 trillion in taxes through all of EFTPS, with more than $148.5 billion paid over the Internet using EFTPS Online. In the first two months of 2005, a record 216,000 taxpayers enrolled. So far in 2005, Treasury has collected nearly $287 billion in taxes through all of EFTPS, with more than $26 billion paid via the Internet option. If this trend continues, considering the added boost of EFTPS-Online tax payments during the tax season peak, 2005 collections may very well hit an all-time high.

"Using EFTPS makes good business sense. More businesses and individuals are taking advantage of the ease, accuracy and security of the system and are choosing to enroll and pay their taxes electronically," said FMS Commissioner Richard L. Gregg.

FMS and IRS continue to work together to enhance EFTPS based on what taxpayers say they need. Last year, two new enhancements were added to the system-Express Enrollment and Federal Tax Deposit (FTD) penalty refund. In Express Enrollment, taxpayers are pre-enrolled in EFTPS and only need to activate their accounts by calling a toll-free number. The FTD Penalty Refund initiative encouraged taxpayers to use EFTPS by refunding a prior penalty to the taxpayer if timely EFTPS payments were made for the following four quarters. It is still too soon to know how many taxpayers took advantage of the abatement because four tax quarters have not passed since we introduced the penalty refund initiative last spring, The success of Express Enrollment is much easier to measure. Since Express Enrollment began in January 2004, more than 123,000 business taxpayers have taken advantage of it. In 2005, as of March 19, express-enrolled taxpayers paid nearly $2.3 billion through EFTPS, compared to $4.4 billion for all of 2004. So far in 2005, in less than three months, we've already reached more than a third of the $6.4 billion collected since Express Enrollment began a little more than a year ago, and more than 50 percent of 2004's collections. At this rate, it is expected that Express Enrollment collections will more than double those of 2004.

In the months ahead, FMS and IRS will continue to look for innovative ways to enhance EFTPS to meet taxpayers' needs.

"Research indicates that EFTPS sells itself. The more people know about and use EFTPS, the more they like it. Word is getting out and as more people move to the Internet, paying taxes using the Internet is a logical next step," said Commissioner Gregg.

For further information, contact Melody Barrett at melody.barrett@fms.treas.gov or call (202) 874-6557 in the FMS Office of Legislative and Public Affairs.