Government e-Payments

It looks like this year I'll need to pay estimated taxes for my pension and social security income or ask Cal-PERS and Social Security to withhold an amount for estimated taxes. Paying it directly seemed to make more sense than trying to make the change through these two huge bureaucracies. TurboTax even helped me by printing out the necessary forms to send with my checks. Then I got to thinking -- since I've been able to pay almost all our bills by direct bank payments, maybe the IRS and the State Franchise Tax Board (California's IRS) will accept electronic payments. What I found surprised me.

I first tried California's Franchise Tax Board by going to http://ftb.ca.gov/online/webpay/index.asp , In about the same time as it takes me to order a book from Amazon.com, we had a Web Payment account and in two or three minutes more, I entered the data necessary to pay advance payments that I need to make over the next twelve months.

Of course I had to know my bank's routing number and my Taxpayer ID Number. I also had to dig up last year's return so I could supply a certain total from that return when told to do so. But otherwise the process was easy and complete.

The Feds, on the other hand, seemed to have taken the most careful route they could. First you go to this link http://www.irs.gov/efile/article/0,,id=97400,00.html and enter some basic information about yourself and your bank numbers. You are then told to expect TWO Mailings! with further information. There is no way to sit down with the intent to send money to Uncle Sam that day. And it could take weeks before you complete the process.

Unlike ethe FTB, IRS has decided to use another government agency to process the payments. Like the FTB, the IRS has decided to complicate your life as much as it will simplify it. For example, these two mailings are indeed important but if you get only one you're out of luck. One of them gives you a PIN number while the other tells you how to use it. With the PIN number and a transaction number you are finally able to choose a password. Here's where the state and feds differ again. You prove to the state who you are by knowing your taxpayer ID number and what the number was last year. The Feds want you to construct a password is 8 to 12 characters in length, and must have UPPER case letters, lower case letters, and ^&*$%# two numbers or special characters.

I would think that security concerns would be about the same for California as the Feds but it sure didn't look like in this process. Have you ever had similar questions about the way the state government operates vs the Feds?