Treasury, Illinois pilot federal-state tax payment system

The Treasury Department and Illinois Revenue Department are testing the ability of state business taxpayers to be able to pay their state withholding taxes at the same time as their federal taxes through a single system.

While Treasury’s Electronic Federal Tax Payment System has been available for federal tax payments for more than 10 years, the pilot with Illinois is the first time that business taxpayers may pay their state withholding taxes through EFTPS.

The system, developed by the IRS and Treasury’s Financial Management Service, offers a variety of payment methods, including the Internet, a telephone voice response system and desktop software.

"Treasury's goal is to collect federal receipts timely, at the lowest cost, and through an all-electronic process," said Don Hammond, Treasury's fiscal assistant secretary, in a statement.

Most small businesses continue to pay federal withholding taxes by check and Federal Tax Deposit coupons. The pilot's goal is to encourage even more taxpayers to enroll in and use EFTPS when the service can be used to pay both state withholding and federal taxes. Results of the pilot will be used to help Treasury determine whether to expand this service to other states and to add other state taxes for payment through EFTPS.

Illinois plans to examine whether making EFTPS available for state taxpayers will improve the efficiency of the state tax collection system.

"This state pilot is an important step in streamlining the process for small businesses, easing the time needed by Illinois business owners to meet their tax requirements and allowing them to focus more on key business operations, '" said Illinois Department of Revenue director Brian Hamer.

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