Electronic Payment Options

In this sophisticated age of technology, knowing your options is the first step in making your life just a little bit easier. We are providing the following information on electronic payment methods to give you the answers to your questions on what options are available and how the process works.

Electronic payment options are convenient, safe and secure methods for paying individual income taxes by:

• Direct Debit (electronic withdrawal from checking or savings account)
• Credit Card

Electronic payment options give taxpayers an alternative to paying taxes by check or money order. Most individual taxpayers can pay electronically either by direct debit or credit card.

Tax Types And Electronic Payment Options

Three types of individual taxes can be paid electronically. The tax types and electronic payment options are as follows:

• Making a payment electronically eliminates the need to send in the associated paper Form 1040-V, Form 4868 or Form 1040-ES.
• Payments must be at least $1.
• Payments for prior tax years are not accepted at this time.

When Can Electronic Payments Be Made

Form 1040 series, U. S. Individual Income Tax Return

• Payment options begin January and end October 15.
• Includes Forms 1040A, 1040EZ and 1040.

Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return

• Payment options begin January and end April 17, 2012.

Form 1040-ES, Estimated Tax for Individuals

• The direct debit payment option began in January 2007.
• Taxpayers can choose one of the following payment effective dates:
  • April 17, 2012;
  • June 15, 2012;
  • September 17, 2012, or
  • January 15, 2013.
• Credit card payment option is available year round.
• Payments can be made 24 hours a day, seven days a week.

Direct Debit (Features and Benefits):

• It is free.
• It is convenient—a taxpayer can e-file early and schedule an electronic payment for withdrawal from a bank account on a future date.
• Form 1040 series tax return payments can be scheduled for an effective date up to and including the return due date (April 17, 2012).
• After April 17, 2012, the tax return payment date will be the same as the date the balance due tax return is filed.
• Form 1040-ES payments can be scheduled for an effective date of:
  • April 17, 2012;
  • June 15, 2012;
  • September 17, 2012, or
  • January 15, 2013.
• Whether or not there is a balance due on the 1040 tax return, a taxpayer can schedule one Form 1040-ES payment.
• It is safe and secure—direct debit information will be used only for the tax payment(s) authorized by the taxpayer. No other withdrawals can legally be made.
• Bank account information is safeguarded along with other tax information.
• Payment information will not be disclosed for any reason other than processing the transaction authorized by the taxpayer.
• The tax payment is listed on your monthly bank statement as “United States Treasury Tax Payment”, to serve as proof of payment.

How to make a direct debit payment

• It is available through most tax preparation software and tax professionals.
• Upon selection of the direct debit option, a payment record will display for entry of account information.
• Taxpayers must know their account number and financial institution’s routing transit number.
• Taxpayers must identify the type of account from which the payment is to be made (checking or savings).
• Account numbers and routing transit numbers can be found on checks and share drafts.
• Taxpayers should check with their financial institution if there are any questions regarding these numbers. Additionally, taxpayers should confirm that the financial institution will allow an electronic debit from the account.
• Some tax preparation software may accept partial payments for an amount less than the balance due on the return.
• Direct debit payments cannot be initiated after the return is filed.

If a taxpayer chooses to pay using direct debit:

• The taxpayer authorizes the U.S. Department of the Treasury (through a Treasury Financial Agent) to transfer money from their bank account to the Treasury account.
• Funds are automatically withdrawn on the payment date selected. However, if a weekend or bank holiday is designated, the payment will not be withdrawn until the next business day.
• Direct debit payments will be withdrawn in a single transaction, not installments.

Cancellations, Errors and Questions:

• Taxpayers can call the Treasury Financial Agent at 1-888-353-4537, toll-free, to cancel a payment or to report problems such as bank closures, lost or stolen bank account numbers, closed bank accounts or unauthorized transactions.
• Once the IRS e-file return is accepted, the scheduled payment date cannot be changed. If the date needs to be changed, the only option is to cancel the payment transaction, and choose another payment method (credit card, check or money order).
• Scheduled payments can be canceled up to 8 p.m. Eastern Time, two (2) business days before the scheduled payment date.
• The cancellation must be authorized by the taxpayer or by a person with access to the taxpayer’s Social Security Number, payment amount and bank account number.
• Taxpayers can also call the above number to inquire about payments through October 15th. Taxpayers should wait at least 5 days after the e-file return is accepted before making inquiries.
• Taxpayers will be notified if a payment is returned by the financial institution because of insufficient funds, incorrect account information, closed accounts, etc. If this occurs, the IRS will send a notification letter to the address on the tax return explaining why the payment could not be processed. The letter will include instructions for sending a check to a unique address that has been established for this initiative.
• In the event the financial institution is unable to process the transaction, the taxpayer will be responsible for the tax payment and for any penalties and interest.
  contact the IRS immediately at 1-800-829-1040 if there is an error in the amount withdrawn.
• In the event the Treasury causes an incorrect amount of funds to be withdrawn from the bank account, the Treasury is responsible for returning any improperly transferred funds.

Credit Card Features and Benefits:

• It is convenient—taxpayers can e-file early, make a payment, and yet delay out-of-pocket expenses.
• It is safe and secure—standard, commercial credit card networks are used. The IRS does not receive or store credit card numbers.
• Payment information will not be disclosed for any reason, other than processing the transaction authorized by the taxpayer.
• A confirmation number is provided at the end of the phone or Internet transaction.
• The tax payment is included on the credit card billing statement as “United States Treasury Tax Payment” for the amount of the tax, as further proof of payment. The convenience fee will be included on the statement as a “Tax Payment Convenience Fee” (or similar language).
• Taxpayers may earn miles, points, rewards or money back from the credit card issuer.

How to make a credit card payment:

• The e-file and pay credit card option is available through a number of tax preparation software and tax professionals. For additional information about e-filing and paying all at once (including convenience fees and accepted credit cards), taxpayers can refer to tax preparation software or a tax professional.
• Pay by phone and Internet options are available through credit card payment service providers.
• When paying by phone, a recorded script will prompt taxpayers through the call.
• When paying by Internet, taxpayers will be prompted to complete the necessary entry fields.
• For more information about paying by phone or Internet and/or to make a payment, taxpayers can contact the following service providers:

• Taxpayers can pay by phone or Internet using a Discover Card®, American Express® Card, Visa® or MasterCard® card.
• To make a payment of $100,000 or greater through the Official Payments Corporation (OPC), taxpayers can call OPC’s Special Services Unit at 1-888-889-7228.

Credit card convenience fees:

• There is a convenience fee charged by the service providers.
• Fees are based on the amount of the tax payment and may vary by service provider.
• The IRS does not receive or charge any fees for payments.
• Taxpayers will be informed of the convenience fee amount before the payment is authorized. This fee is in addition to any charges, such as interest, that may be assessed by the credit card issuer.
• See “How to make a credit card payment” above to contact service providers and to obtain convenience fee information.

If a taxpayer chooses to pay using a Credit Card:

• Payments must be made electronically through tax preparation software, a tax professional or a credit card payment service provider (via phone or Internet). Credit cards should not be forwarded to the IRS with the return, nor should credit card account numbers be written on the return.
• The processors will forward the appropriate tax payment information to the IRS.
• The payment date will be the date the charge is authorized.
• Partial payments can be made by phone or Internet. A maximum of two payments per tax type (or per quarter if making estimated payments) can be made by phone or Internet.
• Some tax preparation software may not allow taxpayers to make partial payments.
• Taxpayers, who e-file and pay, should re-file rejected returns promptly to ensure timely payment. Otherwise, the payment may have to be re-authorized.

Cancellations, Errors and Questions:

• Generally, credit card payments cannot be canceled.
• Taxpayers can call the credit card issuer or credit card payment service provider’s customer service number to report problems, such as, unauthorized charges or concerns regarding payment errors.
• Taxpayers can contact the IRS at 1-800-829-1040 to report problems concerning the amount of tax owed or any other matter concerning the tax return.
• Taxpayers may also write to the IRS office where the return would be mailed regarding income tax payment concerns. The impacted taxpayer’s Social Security Number, payment tax year and payment method should be included.
• In the event the service provider fails to forward the tax payment to the Treasury, the taxpayer will be responsible for the tax payment and for any penalties and interest.
• Voluntary or estimated payments, such as, Form 4868 and Form 1040-ES payments that result in an overpayment will be resolved through normal administrative procedures.
• In most instances, the Treasury will refund an overpayment to taxpayers once the return is received and processed. An overpayment may be used to settle or offset an existing debt on the taxpayer’s account.

If you would like further information regarding this topic or any other tax related issue, contact Henssler Financial at 770-429-9166 or at experts@henssler.com. You may also access this information at the IRS website: http://www.irs.gov/.

Disclosures

This article is meant to provide valuable background information on particular investments, NOT a recommendation to buy. The investments referenced within this article may currently be traded by Henssler Financial. All material presented is compiled from sources believed to be reliable and current, but accuracy cannot be guaranteed. The contents are intended for general information purposes only. Information provided should not be the sole basis in making any decisions and is not intended to replace the advice of a qualified professional, such as a tax consultant, insurance adviser or attorney. Although this material is designed to provide accurate and authoritative information with respect to the subject matter, it may not apply in all situations. Readers are urged to consult with their adviser concerning specific situations and questions. This is not to be construed as an offer to buy or sell any financial instruments. It is not our intention to state, indicate or imply in any manner that current or past results are indicative of future profitability or expectations. As with all investments, there are associated inherent risks. Please obtain and review all financial material carefully before investing. Henssler is not licensed to offer or sell insurance products, and this overview is not to be construed as an offer to purchase any insurance products.