The Internal Revenue Service this month is mailing postcards with an electronic customer number to 12 million taxpayers, rather than sending them the traditional tax booklet after Jan. 1.

The e-file customer number (ECN) will serve as an online signature, so these taxpayers don't have to mail a paper signature document to the IRS.

The postcards are being sent to filers who used a personal computer and tax preparation software, such as Intuit's TurboTax or Block Financial's Kiplinger TaxCut, to prepare their federal income tax returns last year.

The pilot program, new for '98 returns, is the latest attempt to boost electronic tax filing. By 2007, the IRS wants to do business electronically with 80% of U.S. taxpayers. For taxable years after 2001, the IRS wants all returns that are prepared electronically to be filed electronically.

Last year, only 15% of the 12 million returns prepared electronically were actually filed via computer.

To file a paperless tax return, you need access to a personal computer with a modem and approved tax preparation software. But participation is voluntary, says IRS spokeswoman Susan Stawick.

The ECN is a one-time-use number. And if a taxpayer loses it, the IRS will not send a new one this year. If you are filing a joint return, your spouse must have received an ECN, too.

Although the overwhelming number of returns filed electronically result in a refund from the IRS, if you do owe a balance, you can still file early electronically, and pay later. You will receive a confirmation from the IRS that your return was received. You can then delay payment until April 15.

This year for the first time, you can pay your balance by credit card. Cardholders of MasterCard, American Express and Discover cards will be able to charge it by calling a toll-free number operated by San Ramon, Calif.-based US Audiotex. Holders of Discover cards issued by Discover Financial Services can pay online if they use TurboTax software, by entering a credit card number and expiration date.

Although the IRS does not charge a fee for using a credit card to pay, card issuers will charge something. Discover has yet to announce its charge. US Audiotex says its average fee will be about 2 1/2% of the balance due. If you owe $2,200, you would pay $49.

-- Kerry Hannon - 12/13/98