From the September 2005 Review of Sales
& Use Tax Software
Over the years, many tax professionals and CPAs have moved beyond general forms
preparation, adding tax planning and other related services to their client
offerings. This also includes the final part of the compliance process for many
clients: remittance of federal, state and other jurisdictional taxes.
With significant penalties awaiting small business owners if they err in either
filing or are late in paying assessed taxes, these business people and their
financial consultants are always on the lookout for ways to make all aspects
of the compliance process reliable and accurate.
As a result, even before the later 1990s when many taxing jurisdictions mandated
electronic filing and remittances for many businesses and tax professionals,
these professionals started using various electronic methods to not only file,
but also to pay the taxes of their clients. Initially, each of the taxing entities
created their own electronic payment systems, with little standardization between
the systems, thus causing confusion for many multi-jurisdictional entities.
The Electronic Federal Tax Payment System (EFTPS) was soon developed by the
government to provide a singular method of making some of these payments, but
some agencies still held on to their unique methods: from requiring specially
formatted documents to wiring of funds and even necessitating phone calls. And
taxing authorities at the state and local level were even more disparate.
In 1997, however, a company called DirecTax (www.directax.com)
developed a system that enabled accountants and small businesses to pay virtually
all tax obligations through a single interface. Developed by a former payroll
professional, DirecTax automates tax payments to these various agencies, including
the ability to schedule payments to occur on a future date.
The system uses consistent Windows screens with data entry performed in fields
that resemble a check. The system opens to a screen from which the user, whether
the small business owner or accountant, selects the taxed entity, the tax type,
the tax period ending date, the payment amount and other information from pull-down
selection lists. DirecTax then automatically enters the banking information
that the user has set up to pay that type of obligation, and enters the recipient
of that tax type (IRS, state, federal/state agency) in the “pay to the
order of” section of the check.
After reviewing the completed “virtual check,” the user can then
either save the file or click the transmit button, which automatically schedules
an EFT of the designated amount and transmits all other required information
(EIN, TIN, PIN, corp. data) to the taxing agency. During setup of the system,
DirecTax collects all of the information that will be needed to file payments
with the various entities, so when it comes time to make payments, the information
is automatically completed, dramatically streamlining and simplifying the process.
DirecTax provides the tax agency receipt number for verification that the
payment has been made and maintains an unlimited history file that enables the
user to print reports of any or all tax payments made to state and federal taxing
authorities. The company also guarantees that payments will be made on time
or they will assume responsibility for any interest or penalties that may be
Pricing for the system is based on the number of companies represented, with
discounts to professionals making tax payments for multiple companies. One company
costs $9.95 per month; two to 25 companies cost $7.95 each; 26 to 50 cost $6.95
each. Further discounts are available for higher numbers of payers. The flat
monthly fee allows an unlimited number of payments for each unique EIN/TIN.
A complete list of taxes that can be paid via DirecTax is available at www.directax.com/taxes.asp.