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More Businesses Required to Use Electronic Payment for Taxes in 2011
IRS Provides Convenient Electronic Federal Tax Payment System (EFTPS)
April 25, 2011
In an effort to reduce the amount of paper transactions handled by the IRS, businesses are required to make tax deposits by electronic funds transfer in 2011. This includes payroll tax deposits and corporate income taxes. The Electronic Federal Tax Payment System (EFTPS) is a free tax payment system provided by the U.S. Department of Treasury, and is available anytime, 24/7.
Using EFTPS requires that you enroll at EFTPS. Once enrolled, you can make federal tax deposits online or by phone, anytime day or night. The payment needs to be scheduled by 8:00pm (EST) at least one calendar day before the due date, but funds will not be withdrawn from your bank account until the date you indicate.
A convenient feature of EFTPS allows tax payments to be scheduled up to 120 days in advance. EFTPS will make your tax payment on the due date you have set, and this date can be changed or cancelled anytime up to two business days before the scheduled date.
Individuals
Individuals can also use EFTPS to make Form 1040-ES estimated tax payments, and they can schedule payments up to 365 days in advance of the due date. Again, this date can be changed or cancelled anytime up to two business days before the scheduled date, making this a convenient method for individuals.
Payroll Taxes
Starting January 1, 2011, businesses are no longer allowed to use paper Federal Tax Deposit Coupons, Form 8109, to deposit taxes at their bank. There is an exemption for businesses with $2,500 or less in quarterly payroll tax liability that is paid with the filing of employment tax returns on Forms 941 or 944.
What this means is that all businesses that make payroll tax deposits weekly, monthly or any other way except with the quarterly return, are required to deposit through the EFTPS.
Please contact our tax professionals at 877.517.6872 if you have questions about this, or any other tax issue.
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