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Thursday, April 22, 2010

Earth Day and Taxes

Today is Earth Day! There is a significant connection to San Jose State University where I teach because the co-founder of Earth Day - Gaylord Nelson, is an alum.

Back to taxes - the Treasury Department announced its green initiative earlier this week (TG-644; 4/19/10). It will be moving more paper transactions to electronic ones. Treasury expects that this will save both money and trees. Specifically, they estimate their new initiatives will reduce costs by over $400 million in five years and save 12 million pounds of paper.

Some details from Treasury:
  1. "First, 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 Treasury's Direct Express debit card."
  2. "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."
  3. "Treasury will eliminate the option to purchase paper savings bonds through payroll deductions for federal employees on September 30, 2010 and for the private sector by January 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. Payroll savers will be encouraged to continue their purchases through Treasury Direct, a web-based system that allows investors to buy and hold electronic savings bonds. Transitioning employees to electronic payroll purchases saves employers administrative costs and allows employees to manage their own bond accounts. This is estimated to save nearly $50 million in the first five years."

Moving tax systems into the 21st century involves both structural changes as well as administrative ones. I think this move by Treasury is a good one as these transactions should be done electronically to make good and appropriate use of today's technology, save money (which should also help reduce the deficit), and electronic can be done more securely than paper transactions. It also helps the growing number of people who keep all of their financial statements electronically.

What do you think?

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