In an effort to make it easier for taxpayers to make payments on personal income taxes, the US Department of the Treasury came up with a free service that allows you to make tax payments online or via phone.
This service is the Electronic Federal Tax Payment System (EFTPS) and is accessible every day of the week, 24 hours a day. It is also free to use, convenient, and secure. At the moment, it is estimated that the EFTPS has around 12 million users that can be grouped into individuals, nonprofits, businesses, and more.
In short, this system was designed to make life easier for taxpayers since they don’t have to disrupt an entire day of work just to go and make a deposit. Still, even though it does sound like a great choice, every taxpayer needs to be aware of the Pros & Cons of this system before taking the plunge.
We did a bit of digging and learned why individuals and businesses in the US are happy to use the EFTPS and why some still have reservations.
The Pros of Using the EFTPS
#1: It is Free to Use
The system doesn’t apply any fees or other types of costs to the taxpayer. Plus, it is a nice way to interact with the IRS on your own terms whether you are an individual or a business. Also, it’s easier for corporations who are required to use electronic funds transfers for all their federal tax deposits.
In short, the EFTPS is a very accessible and free-to-use method for anyone who has to deal with the IRS.
#2: It is Comfortable & Safe
The times when you had to leave the home, get in your car and spend almost an entire day at an IRS office to pay your taxes are long gone. This is especially important in current times when sitting in long lines, next to a bunch of strangers, is not safe (crowded, indoor spaces are to be avoided to prevent the spread of the COVID-19 virus).
Plus, you don’t even have to be logged in when the transaction takes place since the EFTPS allows users to schedule payments 365 days ahead of time. This means you can log in one evening and schedule all your tax payments for the year to come. Next, all you have to do is make sure you don’t run out of money in the account used for tax payments.
Lastly, EFTPS is more convenient than Direct Pay because it saves all your taxpayer information. This way, all you have to do is select the account and choose the type of payments you want to make. As a result, once you save the right information, the chance of introducing the wrong data is non-existent.
#3: It is Secure
Nowadays, most online payments are secure. Otherwise, e-commerce wouldn’t have been nearly as popular. The US government took extra security measures to make sure your taxes don’t end up in some hacker’s account. There are three authentication steps that include an 18-digit enrollment number, a PIN issued by the government, and your password.
Also, once the transaction is processed, you will receive a confirmation email, as a method of notification that the payment went through.
#4: You Are in Control
With EFTPS, you decide when and how much to pay (not a penny more). The government doesn’t have access to your bank account. Also, the system keeps track of your transaction history as far back as 16 months. This way, you have a way to verify your payments and make sure everything is in order.
Lastly, with an EFTPS account, you can pay any federal taxes due. It’s one account for all types of taxes.
The Cons of Using the EFTPS
#1: There are Some Safety Risks
When used correctly, the system is safe to use. However, the user also bears part of the responsibility which means they’ll have to pay attention to phishing attacks and data leaks that could expose their login credentials.
#2: Lengthy Registration
Sadly, it can take up to five days to register an account. That’s why it’s best to think ahead if you want an active account to use for any urgent tax payments.
#3: It’s Just a Payment System
While it is a great option for taxpayers everywhere, it’s important to keep in mind that it’s only a more accessible method of payment. Using the EFTPS users won’t be exempt from having to figure out the correct amount to pay. Also, it doesn’t offer insight into various tax-saving opportunities available in your state. For this, you will have to hire a tax professional.
The EFTPS makes taxpayers’ lives a little easy. The system is accessible anytime during the day and night and can be used to schedule payments in advance. It’s also safe to use, as long as your devices are safe from prying eyes, and doesn’t require any extra investments on your part. At the end of the day, it can be an asset for anyone looking to spend less time worrying about how to pay their taxes more efficiently.