IRS Plans Small Businesses Filing Break

March 25, 1999

IRS Plans Small Businesses Filing Break

The Internal Revenue Service said this week it plans to allow small businesses with less than $200,000 in payroll taxes to file the traditional way – with paper and tax forms.

Currently all firms with more than $50,000 in payroll taxes must use the Electronic Federal Tax Payment System. That system, which the IRS considers more efficient, can be a burden for some small firms, consuming managers' time and driving up costs, according to critics. The IRS proposes to raise the threshold to $200,000 beginning next Jan. 1, 2000.

"We believe that most of the businesses that are currently using the system will continue to do so because they find it easier to use," said IRS Commissioner Charles Rossotti in an Associated Press report.

Sen. Christopher Bond, R-MO, Small Business Committee chairman, urged the government to continue to waive penalties on businesses that still must file electronically. The IRS said Monday it would waive penalties from July 1 through Dec. 31. A public hearing on the proposed regulations is set for May 11.

- by Michael Thompson