Electronic Tax Payment Easier for Employers

WASHINGTON - Nearly 50,000 employers have stopped writing checks to the Internal Revenue Service, but that's just fine. In fact, they've paid the government over $278 billion since the beginning of 1995. They are the vanguard of a new system for paying taxes by transferring money electronically from their bank accounts to the U.S. Treasury.

The IRS began testing an electronic deposit system, called TAXLINK, in 1992, for employers in Florida, Georgia and South Carolina. Last year, the system became available for employers nationwide.

TAXLINK eliminates the need for employers to bring checks and paper deposit coupons to designated banks to pay their taxes. Once enrolled in TAXLINK, an employer may initiate electronic payments to the IRS by telephone or computer.

A recent sampling of TAXLINK participants found 98 percent satisfied with the system. One respondent commented, "Very pleased ... best thing the IRS has done.- Among the factors that were important in deciding to use TAXLINK were:

• time savings (96 percent),
• ease of use (95 percent), and
• reduced costs (71 percent)

Tax rules require over 800 large employers to pay taxes electronically now, with a scheduled expansion to over 1500 next year and over one million the following year. By 1999, electronic payments will account for 94 percent of all tax deposits. A more advanced Electronic Federal Tax Payment System will replace TAXLINK during 1996, enabling IRS to handle future electronic transactions.

The IRS has identified 731 companies which must begin to use TAXLINK in January -- those which deposited over $47 million in federal taxes in either 1993 or 1994. Over 90 percent of these firms are already enrolled for TAXLINK, and the IRS is working with the remaining group so that they will meet the law's requirements in January. Other companies which would like to get an early start on their use of electronic payments may call the IRS TAXLINK office at 1-800-829-5469 for more information.

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