Tax tip: make estimated and other tax payments electronically

In November 2021, members of a CPA Academy course took part in a survey that analyzed how they instruct their clients to pay their estimated taxes. Options included:

  • By check using Form 1040-ES;
  • By direct payment on www.irs.gov;
  • Via www.efpts.gov (the Electronica Federal Tax Payment System); and
  • Through their control software.

Of the first 1,014 responses, 37% still instructed their customers to pay by check. Likewise, 36% of the remaining 350 respondents answered in the same way.

Given the IRS’s clear admission of their inability to open all mail, and with many anecdotal stories of lost checks and unapplied payments, it is alarming that over a third of practitioners do not use electronic payments for the majority of their customers has switched. Of course, the IRS could also improve its www.eftps.gov system to make it easier for customers and, for some taxpayers, to pay more conveniently, for example weekly or monthly.

In today’s landscape, every company in the tax industry should have a policy that strongly encourages customers to make payments electronically. It’s a safe, efficient, and quick method. And as the question above shows, there are at least three excellent alternatives for this.

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

Information about the author

E. Martin (Marty) Davidoff is a partner-in-charge in the National Tax Controversy Practice of Prague’s Metis CPAs, a member of the Prague’s Metis International Group. He has been in the accounting industry for over 40 years. Marty is a renowned professional in resolving IRS and state tax disputes, as well as state and state income tax matters and federal tax lien withdrawals. In addition, Marty has experience in business formation, tax planning for individuals and corporations, and taxation of S corporations and limited liability companies.

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