The Treasury Department has launched a new initiative to dramatically increase the number of electronic transactions, including quarterly tax payments, in order to reduce paperwork.
The initiative was announced Monday in advance of Earth Day later this week. It will save an estimated $400 million and 12 million pounds of paper in the first five years.
Treasury must lead the way in developing methods to deliver payments that are safe and secure in a manner that is efficient and reliable, said Treasury Secretary Tim Geithner in a statement. By moving to all-electronic payments, Treasury will save hundreds of millions of dollars and substantially reduce our environmental impact, making this a win-win for all Americans.
Starting Monday, the Treasury will begin implementing a three-pronged initiative to reduce the number of transactions conducted on paper by moving them to electronic systems. First, the Treasury will require individuals receiving Social Security, Supplemental Security Income, Veterans, Railroad Retirement and Office of Personnel Management benefits to receive payments electronically.
Individuals will be able to receive benefits either through direct deposit into a bank account or the Treasurys Direct Express debit card. One million Americans are already receiving their benefit payments through Direct Express. The requirement will apply to new enrollees beginning on March 1, 2011, and to existing check recipients beginning on March 1, 2013. Currently, 85 percent of federal benefit recipients receive their payments electronically. Moving all recipients of these benefits to electronic payments is expected to save upwards of $300 million in the first five years.
Second, businesses currently permitted to use paper Federal Tax Deposit coupons will have to make those deposits electronically beginning in 2011 with a few exceptions, primarily businesses with $2,500 or less in quarterly tax liabilities that pay when filing their returns. Currently, nearly 98 percent of all business tax dollars are paid electronically through Treasurys free Electronic Federal Tax Payment System. IRS research has shown that businesses using EFTPS are 31 times less likely to make an error. This change will save an estimated $65 million in the first five years.
Finally, Treasury will eliminate the option to purchase paper savings bonds through payroll deductions for federal employees on Sept. 30, 2010, and for the private sector by Jan. 1, 2011. This policy covers only paper savings bonds purchased through payroll sales; individuals will still be able to purchase paper savings bonds at financial institutions for themselves and as gifts. This is estimated to save nearly $50 million in the first five years.
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