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e-CHECK
e-CHECK Presented by: Marilyn Cooksey Indiana Department of Revenue Kenneth J Miller, Commissioner Agenda b b b b b b What is e-check? Paper Check Process Electronic (e-Check) Process e-Check Process Implementation at Indiana Dept of Revenue e-Check History at Indiana Dept of Revenue Pros and Cons of e-Check Processing 1 What is e-check? “e-Check” is an electronic format (paperless check) used to make state tax payments to the Indiana Department of Revenue. The Indiana Department of Revenue provides a web based application that offers taxpayers an opportunity to supply “one time only” tax and bank account information used to initiate a debit transaction from the taxpayer’s account for the amount specified by the taxpayer. The information is processed and ultimately results in ACH (Automated Clearing House) transactions to the Federal Reserve System. The ACH process results in funds debited from the taxpayer’s account and sent to the Indiana Department of Revenue’s financial institution. The Returns Processing System (RPS) uses the information contained in the payment transaction to credit the taxpayer’s account. Paper Check Process Flow Mailed Pmt Taxpayer sends pmt Revenue Government Center Complex Revenue Returns Processing Center Received Pmt Pmts batched for processing Pmt File Transactions Transmitted to Server Taxpayer Payments Pmt posted to Taxpayer’s Acct DOR Taxpayer Account Pmt Encoded Pmt Opened Debit Req Taxpayer’s Bank Fund Tsfr Trans to ACH ACH System Fund Tsfr Bank Deposit Dor’s Bank Prepare Deposit 2 Paper Check Process b b b b Manual effort to process mail Manual steps and time required to process check to credit taxpayer acct Manual steps and time required to process checks before submission for bank deposit. Delay in receipt of monies by Dept of Revenue e-Check Process Flow Taxpayer Request Pmt Req Pmt Req Access Indiana NSF NSF Pmt Req Revenue Government Center Complex Rtn Chk Bill Pmt Req Internet Bank Fund Tsfr Fund Tsfr NSF Fund Tsfr Pmt posted to Taxpayer’s Acct DOR Taxpayer Account ACH System NSF DOR’s Bank Debit Req Taxpayer’s Bank 3 Electronic (e-Check) Process b b b b No mail to process Immediate verification of ABA routing number Immediate verification of taxpayer id or AR acct number Automatic generation of credit transaction to taxpayer’ taxpayer’s RPS account Electronic (e-Check) Process b b b b Automatic generation of debit transaction to taxpayer’ taxpayer’s bank account Rapid transfer of monies to Revenue’ Revenue’s bank acct Automatic notification of returned checks Ability to quickly issue returned check bills 4 Electronic (e-Check) Process b b Ability to balance bank deposits to payments posted in RPS Low access processing fee to taxpayer $1.00 flat fee E-Check Debit Acceptance Verbiage The use of an electronic check or E-Check for payment is agreement to these terms, by clicking the NEXT button is your acknowledgement and acceptance of this policy and it’s terms. 5 e-Check Process Implemented at IDOR b b b b Function implemented in August, 2002 Development partnership between • Indiana Department of Revenue • Access Indiana • First Internet Bank of Indiana (FIBI)/Remember Data Services (RDS) Business Tax Registration Fee payment scheduled for June, 2003 implementation 2003 was the first year the process was available during Individual Income Tax filing season e-Check History e-Check vs Credit Card 9000 8000 7000 6000 5000 4000 e-Check Credit 3000 2000 1000 0 Aug Sep Oct Nov Dec Jan Feb Mar Apr August 2002 - April 2003 6 e-Check History e-Check Vs Credit Card AugSepOctNovDecJanFebMarAprTotale-Check105178214198169262917106734126522Cr August 2002 - April 2003 e-Check History AR e-Check vs Credit Card 700 600 500 400 e-Check Credit 300 200 100 0 Aug Sep Oct Nov Dec Jan Feb Mar Apr August 2002 - April 2003 7 e-Check History AR e-Check vs Credit Card Stats AugSepOctNovDecJanFebMarAprTotale-Check611291651531471511621441131225Credit309 August 2002 - April 2003 e-Check History IND e-Check vs Credit Card 9000 8000 7000 6000 5000 4000 e-Check Credit 3000 2000 1000 0 Aug Sep Oct Nov Dec Jan Feb Mar Apr August 2002 - April 2003 8 e-Check History IND e-Check vs Credit Card Stats AugSepOctNovDecJanFebMarAprTotale-Check444949452211175592332995297Credit2372633 August 2002 - April 2003 e-Check History Total e-Check Pmts vs Returned Pmts 3500 3000 2500 2000 Total Returned 1500 1000 500 0 Aug Sep Oct Nov Dec Jan Feb Mar Apr August 2002 - April 2003 9 e-Check History Tot e-Check Pmts vs Returned Pmt Stats AugSepOctNovDecJanFebMarAprTotalTot Pmts105178214198169262917106734126522 Returned Check Percentage: .02 August 2002 - April 2003 Anticipated e-Check Growth Based on Credit Card Usage History 18000 16000 14000 12000 10000 8000 AR IND 6000 4000 2000 0 1998 1999 2000 2001 2002 2003 10 Anticipated e-Check Growth Based on Credit Card Usage History 199819992000200120022003AR00145498966521380IND301446286358121 Future e-Check Usage and Enhancements b b b b Provide ability to define processing date in future Enhancement of Individual Income Tax to include Estimated quarterly payments Payment of Trust Taxes including: Retail Sales, Withholding, Food and Beverage, and others Payment of Corporate taxes including quarterly Estimated payments 11 Pros and Cons to e-Check Pros b No paper checks b Timely processing and crediting of taxpayer accts b Revenue saves processing time and cost b Taxpayer assured of timely posting of payment b Low convenience cost to taxpayer b Low suspension rate due to taxpayer id verification Cons b Returned checks are not totally eliminated e-CHECK Questions? 12
