Making it easier to pay your taxes

Kiplinger's Personal Finance Magazine, Nov, 1998 by James Ramage

1999 will bring paperless filing and plastic payments.

Like the banks, brokers and mutual funds that are rolling Out more-convenient ways for busy customers to transact business, the IRS plans to test a number of initiatives this coming filing season. The guinea pigs for these test programs will be the eight-million-plus taxpayers who prepared their 1997 returns with tax software, such as Kiplinger TaxCut and TurboTax, whether they filed electronically or mailed in their forms. People who use tax software make good test subjects because they've already taken the first step toward streamlining their filing. The IRS would like to see more people follow that lead; its goal is to receive 80% of all tax returns electronically within ten years.

PAPERLESS FILING. When everyone else gets their fat packet of instructions in mid to late January, those lucky souls will receive a five-digit code and instructions on how to file truly paperless returns.

In the past, even if you transmitted your return via computer, you still had to mail in a printed certification with your signature and copies of your W-2 wage statements. Now the IRS will use the code number to verify identification, and will forgo seeing your copy of the W-2.

AUTOMATIC DEBIT, The specter of the IRS dipping into taxpayers' bank accounts is sure to raise the hackles of the conspiracy-minded and the vaguely distrustful. But the debit of a balance due follows naturally from the automatic deposit of refunds. (Last year, 17.5 million filers had refunds totaling $32 billion electronically zapped to their accounts.) Starting this year, if you owe money you'll be able to set the date--April 15 sounds good--for the IRS to debit your account.

CREDIT CARD PAYMENTS. A number of states, including Alabama, Oregon and Vermont, have smiled on frequent fliers (and holders of other "reward" credit cards) by allowing them to pay their taxes with plastic. Now, the IRS will, too. Electronic filers who owe money will be allowed to call a toll-free number and pay their tax as if they were buying a flannel shirt from L.L. Bean: by giving a credit card number. But Congress won't let the IRS pay the transaction fees that credit card companies charge merchants, so you'll be hit with a surcharge based on the amount of tax you owe, perhaps 2% to 3% of your bill. Visa cardholders are out of luck: Citing concerns about the fee structure, the company opted out of the program.