Americans can now pay Uncle Sam the taxes they owe the same way they pay their bills and make purchases via the Internet.

U.S. Treasury Department and Internal Revenue Service officials on Thursday announced the launch of a web-based system allowing businesses and individuals to pay their taxes directly on-line.

"It's the first time that we are using the Internet and that's a very big milestone," said IRS Commissioner Charles Rossotti, adding that users will also eventually be able to access past tax payment data.

The Electronic Federal Tax Payment System (EFTPS), or EFTPS-OnLine Web site, http://www.eftps.gov, replaces a more complex procedure for paying taxes electronically.

Previously, these taxpayers had to install special software on their computers and dial directly into the treasury's computer system, the officials said.

"Today we have taken some real steps to make the government better," said Deputy Treasury Secretary Kenneth Dam. "These principles: convenience, security, confidentiality, and privacy- will be applied to paying taxes online."

The web site is targeted primarily toward businesses and individuals who must make several estimated tax payments within a year, although the system is available to everyone.

Taxpayers already are able to file their tax returns electronically through several third party systems, but tax payments can now be made directly via the new Web site.

Rossotti said at present the IRS has no plans for establishing a direct tax filing system, but will rather continue with the third party process that accounted for 40 million tax returns filed last year.

In addition to the new online payment system, tax payers will still be able to pay taxes with debit transactions and credit cards.

Launch of the new payment Web site comes at a sensitive time after reports that employees at Mellon Financial Corp. contracted by the IRS, hid tens of thousands of paper tax returns. The Pittsburgh, Pennsylvania-based financial services firm said employees hid the documents because they were overwhelmed by paperwork.

But Treasury and IRS officials on Thursday all agreed the Mellon Financial mishap was a good argument for using the new online payment system.

"It does show you the value of going to an electronic system," said Treasury's Financial Management Service Commissioner Dick Gregg.

Gregg and others assured that the private information users submitted while using the new Web site, which will be operated by two unnamed banks, would indeed be secure.