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Using Internet To Pay Taxes

Online tax filings make tax returns filing and payment of the taxes easier and less cumbersome. Now in USA, both state and federal tax forms and instructions are available online and it can be easily downloaded from the website www. irs. ustreas. gov. Tax returns can be now filed through Internet and tax payments can be made through online. Online filing through Internet is speedier, expedient and more precise than the traditional paper filing scheme. Under this method, IRS confirmation for filing tax returns is acknowledged instantly through online.

Further, it also facilitates the IRS to forward the filed tax return data’s to the concerned state agency. One another major advantage is that the any tax refund can be deposited to the taxpayer’s account through the electronic Direct Deposit system, thereby making turnaround time from filing tax return to receive tax refunds within few weeks. Online tax filing has been introduced by the IRS mainly to ease the hardship of calculating taxes and filing tax returns especially for Net-savvy taxpayers. IRS launched the online tax filing services as early as 1996 through its official website namely www.

irs. ustreas. gov . This has facilitated the tax payers to download the tax forms through online, to know about instructions, to receive important highlights of tax law, clear doubts by going through FAQ section [frequently asked questions] and above all serve as an interactive channel to find solution to common tax problems. It is to be observed that during the first year of operation, IRS website had more than 100 million hits and more than 3 million documents were downloaded by the taxpayers. In the year 1997, more than 14 million returns were filed electronically.

However, presently online services have been expanded to facilitate taxpayers to file not only their federal but also state returns through online. According to IRS Oversight Board, in the year 2006 alone, about 55% of all tax returns are filed online. [Cooper, 1998]. IRS also introduced online tax returns to charities also with effect from January 1, 2004 and also conducts more audits of charities and enhances the sharing of information with states. Further, IRS also placed Form 1023, the application for tax-exempt status online. [Schwinn, 2002, p. 24]

According to IRS Restructuring and Reform Act of 1998, a target of 80% electronically filing tax returns was set by 2007. However, the actual online filing during 2007 was only 58% and IRS realized that target could not be met. Hence, the target of achieving of 80% online tax filing has been extended by 2012 now. [Russell, 2008]. It has taken a minimum of 3 to 4 years for countries like US, France, Singapore and UK for attracting tax payers to use e-filing channels for tax return filing. 2. GENERAL INFORMATION ABOUT USING THE INTERNET TO PAY TAXES Presently, IRS of USA has the categorized the following options for e-filing tax returns.

1. Individual Taxpayers- An individual is to qualify to file online under the Free File program which is offered completely free of charge. 2. Business and Self-employed Taxpayers- This can be utilized by corporations, partnerships and estates and trusts. 3. Mid-sized and Large Corporations- While majority of these corporations may use e-filing voluntarily whereas some mid-sized and large corporations are needed to e-file their returns compulsorily. 4. Tax –Professionals- Many online e-services products are accessible to tax professionals which include the electronic mode of e-file application.

5. Non-Profits and Charitable Organization – For tax-exempt organization, e-filing is available. Under new regulations, large non-profit organization has to file their e-returns now. IR-2005 -33 which was released by IRS during 2004 has eased the minimum eligibility for tax advisors to employ IRS suite of e-services incentive products thereby catering their requirements to access these priceless online tools. This “e-service’ facilitates tax advisors and tax payers to interact with IRS through online on 24/7 basis.

Thus, tax consultants who e-file any mixture of five or more accepted business and individual tax returns in a calendar year now eligible to utilize the following three e-service products namely; ? Disclosure Authorization [DA]. ? Electronic Account Resolution [EAR]. ? Transcript Delivery [TDS]. Disclosure Authorization can be used by eligible Certified Professional Accountant [CPA] for viewing and modifying existing tax forms through online. DA facilitates these tax consultants to file electronically Forms 2848, Form 8821, Declaration of Representatives, Power Attorney and Tax Information Authorization.

DA speeds up processing and issues a real-time acknowledgement of accepted submissions. Under EAR, tax consultants can speedily resolve problems in client’s account through online thereby making enquiries regarding tax refunds, missing payments, installments agreements or notices. Such tax consultants should have power of attorney in form 2848 on file and then only they are eligible to make any enquiry into a client’s account. Replies to these queries are mailed through a secured e-mail within three business days. TDS solves client’s demands for account and return information speedily in a secure, online session.

A tax consultant who is having a power of attorney can file to request and receive an account, income-tax return transcript and also to verify the non-filing communications for individual taxpayers and account transcripts especially for business class taxpayers. E-service registration: Tax consultant with eligible qualification like CPA’s who wish to utilize any e-service product must register and create an electronic account by choosing a user name, password and PIN [Personal Identification Number]. An on-screen acknowledgment corroborates the registration process.

Further, a tax consultant may select to use a PTIN [Preparer Tax Identification Number] in tax returns rather than a social security number and this will facilitates him to apply for and receive a PTIN through online or to search for a forgotten number. A tax consultant can apply for IRS e-file application, complete the relevant application and submit and even update their application through online . Further, an organization can delegate its e-service authority to other individuals by recognizing them on their IRS e-file application. [Laffie, 2005, p. 98].

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