IRS offers electronic payment

The Internal Revenue Service unveiled its latest electronic service today, enabling individuals and businesses to pay their taxes online over a secure Internet site.

Known as the Electronic Federal Tax Payment System, www.eftps.gov, it is the first time the tax agency is using a system that is completely online to handle a procedure.

"The Internet is an increasingly integral part of today's business community. It makes sense to offer an online option for paying taxes," IRS Commissioner Charles Rossotti said.

Businesses and individuals can enroll in the service via the Internet. Taxpayers receive a confirmation kit by mail with instructions for obtaining a password. A second password is given as added security.

The tax payment is debited from a taxpayer's bank account or paid by credit card. The payment is handled through Bank of America or Bank One, depending on a taxpayer's state. The bank then sends the payment to the IRS.

The tax payment service originally was introduced in November 1996, and businesses have used it to pay more than $5.7 trillion in federal taxes. However, the original system required taxpayers to dial in and did not use the Internet to handle the transaction.

The IRS has many other electronic services available or on the drawing board. Last year, more than 40 million taxpayers filed their returns electronically using a special software program or paying a tax preparer who was authorized to file electronically with the IRS.