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Best Practices for Making Tax Payments – Don’t Send in a Check

Both the IRS and the FTB offer the ability to make electronic payments online.  Therefore, the days of manually writing a check and mailing it to the taxing agency via certified mail make little sense, given that secure options exist for electronic payments.  Manual checks can be lost in the mail, stolen, or incorrectly posted to the wrong tax period.

For the IRS, individual taxpayers can make an electronic payment online through Direct Pay with a bank account.  See the following link:  https://www.irs.gov/payments/direct-pay.  An individual taxpayer may use this service to pay Form 1040 taxes, estimated taxes, or other associated forms directly from your checking or savings account at no cost.  Also, the website allows a taxpayer to track payment by signing up for email notifications.

One drawback with Direct Pay is that not all tax liabilities can be paid using Direct Pay.  The IRS has a helpful lookup table online to determine whether a balance owed to the IRS can be paid using Direct Pay.  See the following link:  https://www.irs.gov/payments/available-payment-types-for-irs-direct-pay.  If payment cannot be made using Direct Pay, a taxpayer must use the federal government’s Electronic Federal Tax Payment System, also known as EFTPS, which is discussed below.

Electronic Federal Tax Payment System (EFTPS)

The best option for businesses or large payments is through the Electronic Federal Tax Payment System (EFTPS), a free service from the U.S. Department of the Treasury.  A taxpayer must enroll online to get started, and in seven business days, a Personal Identification Number (PIN) will be mailed to the taxpayer’s contact address.  Upon receipt of a PIN, a taxpayer can make payments and check payment history.

A potential drawback with EFTPS is that a taxpayer must wait to receive a PIN before making a payment, but once enrolled, the process is relatively straight forward and secure.  Like Direct Pay, a taxpayer can obtain a receipt and track payment.  See the following link: https://www.eftps.gov/eftps/direct/EftpsHome.page/.

Web Pay California Franchise Tax Board

The FTB has a similar electronic one-line payment program called Web Pay, and it may be used for both personal taxpayers as well as businesses (corporation, partnership, or LLC).  See the following link: https://www.ftb.ca.gov/pay