WO2003079157A2

WO2003079157A2 - A method and system for depositing federal tax payments

Info

Publication number: WO2003079157A2
Application number: PCT/US2003/007867
Authority: WO
Inventors: Craig M. Watson
Original assignee: Payment Engineering Llc
Priority date: 2002-03-14
Filing date: 2003-03-13
Publication date: 2003-09-25
Also published as: AU2003218159A8; WO2003079157A3; AU2003218159A1

Abstract

A computer-implemented information processing system that acts as an electronic or digital payment communications system is provided. The present invention enables a fax machine or scanning device (101a) to act as an electronic or digital payment communications system (103) for making electronic payments in general, and specifically, Federal Tax Deposits (101b). The system requires no technology at the point of use other than a fax machine or related device such as a scanner, and thus avoids a significant source of user resistance to using electronic payment methods. The inventive system also generates the receipt desired by small business taxpayers, and utilizes the existing Electronic Federal Tax Payment System (EFTPS) (221) to make U.S. Federal tax payments. The system encompasses the formatting, communication, image processing (212), and transmission of payment instruction messages from the taxpayer (or more generally, payer) to EFTPS (receiving system) (104) or other target payee system. The system also is capable of generating payment instructions to other electronic payment platforms beyond EFTPS, including Automated Clearinghouse (ACH), Automatic Teller Machine (ATM) networks, and Credit Card merchant systems, among others.

Description

A Method and System for Depositing Federal Tax Payments

FIELD OF THE INVENTION

[0001] The present invention relates generally to tax payments.

BACKGROUND OF THE INVENTION

[0002] Tax authorities across the world, including the Internal Revenue Service (IRS) in the United States, desire to convert most tax payments and tax return filings to electronic form on an aggressive schedule. This process is facilitated in the United States with two electronic platforms: the Electronic Federal Tax Payment System (EFTPS) for electronic payments, and the e-File system for electronic filing of returns. [0003] One barrier to widespread use and acceptance of these platforms is the need for the taxpayer to use a computerized or telephonic interface to communicate with the underlying systems. Consumers without direct or indirect (e.g., through a paid tax or payroll service provider) access to the technology cannot use the EFTPS or e-File systems. Further, a substantial number of household and small business taxpayers with access to the technology are leery of using it for something as sensitive as paying taxes, just as they substantially resist using the Internet to pay household and small business bills. Similar limitations are experienced by State and local tax agencies. [0004] Currently, a significant portion of small business Taxpayers (TP) pay their United States Federal tax deposits at a local bank (a registered Fed depositary institution) on a regular basis, generally every two weeks. The TP presents a paper coupon (the Federal Tax Deposit or FTD coupon), along with cash, money order, or a check drawn on any domestic financial institution for payment of the designated tax obligation. The receiving bank issues a date-stamped payment receipt that constitutes valid proof of payment in the event of disputes or errors. Nearly 50 million payments are made each year this way at over 9,000 banks. Despite the acknowledged inconvenience of making these payments in person, small business taxpayers continue to pay these deposits in person, principally because they receive a paper receipt for their payment. [0005] In summary, the overall paper-based process today consists of the following steps: the bank receives and stacks collected FTD coupons and checks or money orders from taxpayers throughout the day. Coupons are compiled and tallied for transmission to the IRS by first class mail, cash is deposited to the bank's account and a credit advice is recorded, checks are deposited for credit to a bank master account via the standard bank check or item processing system, and copies of paperwork are transmitted to the back office of the bank for reconciliation. During the next business day, the bank reconciles the payments, coupons, and back office receipts, and then submits aggregate payment to the IRS via the Federal Reserve Bank electronic means known as Fed Online. In one bank studied during development of the subject invention, the process described included 31 steps, 8 departmental handoffs, and 10 manual data entries.

[0006] What would therefore be useful would be a system and method for depositing Federal tax payments that is more convenient than physically visiting the bank. Such a system and method for depositing Federal tax payments should be more efficient than the existing bank method of processing Federal Tax Deposit payments. The system should also leverage the existing Electronic Federal Tax Payment System, providing a direct linkage from paper coupons to electronic payment. The system should further be applicable to more general electronic payments as well, offering a direct and efficient fax connection between payers and the systems for settling their payments electronically. SUMMARY OF THE INVENTION [0007] A system and method for depositing Federal tax payments in accordance with the principles of the present invention is more convenient than physically visiting the bank. A system and method for depositing Federal tax payments of the present invention is more efficient than the existing bank method of processing Federal Tax Deposit payments. A system and method for depositing Federal tax payments of the present invention leverages the existing Electronic Federal Tax Payment System, providing a direct linkage from paper coupons to electronic payment. A system and method for depositing Federal tax payments of the present invention is applicable to more general electronic payments as well, offering a direct and efficient fax connection between payers and the systems for settling their payments electronically. [0008] A system and method for depositing Federal tax payments in accordance with the principles of the present invention provides a generally applicable electronic payment system based on the use of faxed or scanned forms. The system requires no technology at the point of use other than a fax machine or related device such as a scanner. A system and method for depositing Federal tax payments of the present invention also generates the receipt desired by small business taxpayers, and utilizes the existing EFTPS system to make U.S. Federal tax payments. A system and method for depositing Federal tax payments of the present invention can also make other tax payments, for example, state and local taxes. A system and method for depositing Federal tax payments of the present invention generates payment instructions to other electronic payment platforms beyond EFTPS, including Automated Clearinghouse (ACH), Automatic Teller Machine (ATM) networks, and Credit Card merchant systems, among others.

[0009] A computer-implemented information processing system that acts as an electronic or digital payment communications system is provided. The present invention enables a fax machine or scanning device to act as an electronic or digital payment communications system for making electronic payments in general, and specifically, Federal Tax Deposits. The system requires no technology at the point of use other than a fax machine or related device such as a scanner, and thus avoids a significant source of user resistance to using electronic payment methods. The inventive system also generates the receipt desired by small business taxpayers, and utilizes the existing Electronic Federal Tax Payment System (EFTPS) to make U.S. Federal tax payments. The system encompasses the formatting, communication, image processing, and transmission of payment instruction messages from the taxpayer (or more generally, payer) to EFTPS (receiving system) or other target payee system. The system also is capable of generating payment instructions to other electronic payment platforms beyond EFTPS, including Automated Clearinghouse (ACH), Automatic Teller Machine (ATM) networks, and Credit Card merchant systems, among others.

BRIEF DESCRIPTION OF THE DRAWINGS [0010] Figure 1 is a block diagram of a system and method for depositing Federal tax payments in accordance with the principles of the present invention.

[001 1] Figure 2 is a flow diagram that shows the functioning and methodology of a system and method for depositing Federal tax payments in accordance with the principles of the present invention.

DETAILED DESCRIPTION OF THE INVENTION [0012] Referring first to Figure 1 , a block diagram of a system and method for depositing Federal tax payments in accordance with the principles of the present invention is provided. Payments are accomplished in the inventive process by way of the following general method. [0013] A fax machine or scanner 1 01 a is used by the payer to transmit an image of the payment instructions, generally with the aid of a specially-designed form or template 1 01 b. The image is received by an industry standard fax or image server, and interpreted into digital signals via an intelligent character recognition (ICR) engine, such as those available from a number of optical character recognition (OCR) providers, and all represented in functional block 1 02. The digital signals from function 1 02 are conformed 1 03 to the transmission protocols governing payment messaging to EFTPS (or any other electronic payment platform, such as ACH, ATM, and Credit Card systems), and sent electronically; [0014] The payment instructions are received 1 04 by the payee receiving system, generally by way of electronic data interchange (EDI), online means, or other standard electronic means, and translated into valid payments in the relevant financial system. For example, in the subject case of Federal Tax Deposit payments in the United States, the EFTPS platform receives EDI and online electronic messages, translates these into Automated Clearinghouse (ACH) debit instructions, and utilizes the banking system for issuing and collecting payments from taxpayer accounts.

[0015] Throughout all aspects of the inventive process, an integrated customer service system 1 05 is utilized to track payments and offer web and phone-based support to both tax payers and the receiving payees. [0016] Figure 2 is a flow diagram that shows the functioning and methodology a system and method for depositing Federal tax payments in accordance with the principles of the present invention. Elements 201 through 209 of Figure 2 correspond to Figure 1 block diagram components 1 01 a and 1 01 b; elements 21 0 through 21 6 of Figure 2 correspond to block diagram component 1 02; elements 21 7 through 227 of Figure 2 correspond to Figure 1 block diagram component 103; element 229 of Figure 2 relates to Figure 1 block diagram component 1 04; and elements 230 through 233 of Figure 2 relate to customer service system component 1 05 of Figure 1 .

[001 ] The inventive system operates as follows in a given payment cycle: Initially, the user or payer 201 , potentially, but not necessarily, operating through an intermediary institution 202 (e.g., a bank), enters data on form 203 which is then transmitted via the fax or scanning device/server 204 over normal telephone line connection 205 or via the Internet 206. Transmission via the Internet 206 includes uploading to an extranet, also denoted by 206.

[0018] The faxed or scanned image of form 203 is then received by a fax/scanner server 207, either through normal telephone line connection and switching, or by polling a communications link 208 to the Internet. Once the image transmission is completed, image counter 209 counts the number of images received, and may transmit a verifying return message immediately or hold until the message is interpreted later in this process. [0019] The received images in the image server 207 are then transmitted to the image interpreter, which employs an optical character recognition or intelligent character recognition engine 210 to convert the handwritten entries on form 203 into digital format. The intelligent character recognition engine 210 employs a reference image and template source 21 1 that provides a library of images and samples to assess the handwritten entries and determine, within certain confidence levels, how they should be translated to digital form. Once the interpreted files are translated to digital images, with clear alphanumeric or other appropriate interpretation, the file is transferred to a digital image/data file 21 2 for use later.

[0020] If the intelligent character recognition 210 engine cannot interpret the handwritten images with acceptable confidence (for example, if a written "4" is too similarly to a written "9" to be clear with 90% accuracy), the record is sent to an exception file 21 3, where it waits interpretation by a human operator in the correction sequence 214. Upon successful correction, the completed file is returned to the digital image/data file 21 2. A database 21 6 system may also be employed to manage storage of digital images and data. Note that all of the steps 207 through 21 6 are can be performed by existing ICR/OCR systems. [0021 ] Database 21 6 now contains digitally interpreted, and therefore machine-readable alphanumeric characters. Access and extraction of this data is conducted by way of a set of access and extraction rules 21 7 to retrieve and use the data for formulating follow-on payment messages, compiled from two message sources: the payment message content (e.g., text) and payment data (e.g., amount, account, routing codes, etc.) sources.

[0022] The payment message formatter 21 8 extracts payment data from database 21 6, and assembles payment messages guided by a business rules engine 21 9 (e.g., a specific payer may be ineligible for use of the payment system, because its registration information may need updating). Message formatter 21 9 also accesses a payer/payee database 220 containing the specific payer's transaction preferences (e.g., source account) and/or the payee's payment processing requirements. In addition, the protocols applicable to specific payment platforms need to be matched to the payee's processing system (e.g., EFTPS generates its own ACH payments, receiving straight electronic data interchange message formats, and thus does not need or recognize ACH message formats as direct inputs). Accordingly, the payment platform-specific message formats are retained and refreshed in the platform protocol repository 221 .

[0023] Message compiler 222 assembles plain text messages destined for reading by the payer/user or intermediary (for example, confirmation of payment execution). The contents of the specific message may be compiled from a pre-configured message library 223, combined with specific format field data, such as brand logo identity materials, pulled from a message content data base 224. Actual payment amounts, account numbers, and other specific payment data are incorporated from the payment message formatter 21 8. While these message components reside in distinct databases for purposes of this description of the preferred embodiment, they may also reside on the same database. [0024] Once these elements of content, format, and data are compiled into the complete message, the communication to the payer/sender is created and queued for transmission in the message queuing server 225. Messages are transmitted and confirmed in the transmission function 226 to receiving payee system 227. The plain text messages bound for the payer are sent by fax or other text transmission system (including e-mail) 228 and both text and other transaction details are retained in a storage database 229.

[0025] Both text and payment messages inform the customer service operations 230, specifically by updating a customer service database 231 , which in turns feeds the web-based customer service interface 232. Both payers and their intermediary institutions, if any, access transaction records, payment histories, and actual document images via the web- based customer service interface 233.

[0026] While the invention has been described with specific embodiments, other alternatives, modifications and variations will be apparent to those skilled in the art. For example, while described herein as applicable to tax payments the principles of the present invention can be applied to other payments such as for example recurring bills, wire transfers, and investments in which a faxed-based or scan-based payment method may be desirable. Accordingly, it is intended to include all such alternatives, modifications and variations set forth within the spirit and scope of the appended claims.

Claims

WHAT IS CLAIMED IS:

1 . A method for depositing payments comprising: faxing or scanning a form or template to the Electronic Federal Tax Payment System; such that a direct linkage from paper coupons to electronic payment is established by leveraging the existing Electronic Federal Tax Payment System.

2. The method for depositing payments of claim 1 wherein the payments are Federal tax payments.

3. The method for depositing payments of claim 1 wherein the payments are State tax payments.

4. The method for depositing payments of claim 1 wherein the payments are local tax payments.

5. The method for depositing payments of claim 1 further including generating payment instructions to other electronic payment platforms beyond the Electronic Federal Tax Payment System.

6. The method for depositing payments of claim 5 further including offering a fax connection between payers and the group consisting of Automated Clearinghouse (ACH), Automatic Teller Machine (ATM) networks, credit card merchant systems, and combinations thereof.

7. A method for depositing payments of claim 1 further including generating a paper receipt.

8. A system for depositing payments comprising: a payment form or template; a fax or scanning device to transmit the payment form or template image; an image interpreter that converts the payment form or template image into digital format; a database for storing the digital information; a payment message formatter that extracts payment data from the database and assembles payment messages; and a message compiler that compiles assembled payment messages into platform-specific message formats.

9. The system for depositing payments of claim 8 further wherein the image interpreter employs a character recognition engine.

1 0. The system for depositing payments of claim 9 further wherein the character recognition engine is an optical character recognition engine.

1 1 . The system for depositing payments of claim 9 further wherein the character recognition engine is an intelligent character recognition engine.

1 2. The system for depositing payments of claim 1 1 further wherein the intelligent character recognition engine employs a reference image and template source that provides a library of images and samples to assess the form or template.

1 3. The system for depositing payments of claim 9 further including an exception file to which images are sent if the character recognition engine cannot interpret the images.

1 4. The system for depositing payments of claim 8 further including a platform protocol repository having payment platform-specific message formats stored therein.

1 5. The system for depositing payments of claim 8 further including an image counter that counts the number of images received.

1 6. The system for depositing payments of claim 1 5 further wherein the image counter transmits a verifying return message.

1 7. The system for depositing payments of claim 1 6 further wherein the image counter holds a verifying return message until the message is interpreted.

1 8. The system for depositing payments of claim 8 further including a database to manage storage of digital images and data.

1 9. The system for depositing payments of claim 8 further including a pre-configured message library from which the contents of the payment message may be compiled.

20. The system for depositing payments of claim 8 further including a fax for transmitting to the payer.

21 . The system for depositing payments of claim 8 further including a e-mail server for transmitting to the payer.

22. A method for depositing payments comprising: transmitting an image of payment instructions via a fax machine or scanner used by the payer; interpreting the image into digital signals via an intelligent character recognition engine; conforming the digital signals to the transmission protocols governing an electronic payment; transmitting the payment instructions via electronic means; translating the payment instructions into valid payments in the relevant financial system; and utilizing the banking system for issuing and collecting payments from taxpayer accounts.

23. The method for depositing payments of claim 22 further wherein the relevant financial system is the Electronic Federal Tax Payment System.

24. The method for depositing payments of claim 23 further including generating payment instructions to other electronic payment platforms beyond the Electronic Federal Tax Payment System.

25. The method for depositing payments of claim 22 further wherein the electronic payment platform is selected from the group consisting of Automated Clearinghouse (ACH), Automatic Teller Machine (ATM) networks, Credit Card merchant systems, and combinations thereof.

26. The method for depositing payments of claim 22 further including transmitting the payment instructions via electronic data interchange (EDI).

27. The method for depositing payments of claim 22 further including transmitting the payment instructions via the Internet.

28. The method for depositing payments of claim 22 wherein the payments are State tax payments.

29. The method for depositing payments of claim 22 wherein the payments are local tax payments.

30. A method for depositing payments of claim 22 further including generating a paper receipt.

31 . The method for depositing payments of claim 22 further including utilizing a specially-designed form or template to transmit an image of the payment instructions.

32. A method for depositing payments comprising: entering data on form or template; transmitting the form or template via fax or scanning device; converting the form or template into digital format; transferring the digital information to a digital image/data file; extracting payment data from the digital image/data file; assembling a payment message; matching protocols applicable to specific payment platforms to a payment processing system; and assembling plain text messages for the payer.

33. The method for depositing payments of claim 32 further including transmitting the form or template over a telephone line connection.

34. The method for depositing payments of claim 32 further including transmitting the form or template over the Internet.

35. The method for depositing payments of claim 32 further including accessing a database containing information on the payer;

36. The method for depositing payments of claim 35 further including accessing processing requirements of the payer from the database.

37. The method for depositing payments of claim 35 further including accessing preferences of the payer from the database.

38. The method for depositing payments of claim 32 further including compiling into the plain text messages for the payer elements of content, format, and data.

39. The method for depositing payments of claim 32 further including counting the number of images transmitted via fax or scanning device; and transmitting a verifying return message.

40. The method for depositing payments of claim 32 further including employing a reference image and template source to convert the handwritten entries into digital format.

41 . The method for depositing payments of claim 40 further wherein the reference image and template source provides a library of images and samples to assess the handwritten entries.

42. The method for depositing payments of claim 40 further wherein if the intelligent character recognition engine cannot interpret the handwritten images with acceptable confidence, sending the record to an exception file.

43. The method for depositing payments of claim 32 further wherein the payment messages are compiled from payment message content and payment data sources.

44. The method for depositing payments of claim 32 further including retaining payment platform-specific message formats.