Federal Tax Deposit Rules Eliminating Paper Coupon
Volume 2010 / Issue 12
December 3, 2010
As of 1/1/11, you will no longer be able to use a paper coupon [Form 8109 (Federal Tax Deposit Coupon)] to deposit federal taxes directly to an authorized bank. Instead, you will need to make deposits by telephone or online using the Electronic Federal Tax Payment System (EFTPS). This means that after 12/31/10, all of the following federal tax deposits will be required to be deposited via EFTPS:
· Deposits of federal employment and unemployment taxes
· Corporate income and corporate estimated taxes
· Unrelated business income taxes of tax exempt organization
· Private foundation excise taxes
· Estimated taxes on certain trusts
· FICA taxes and withheld income taxes
· Railroad retirement taxes
· Non-payroll taxes, including back-up withholding
· Excise taxes reported on Form 720, Quarterly Federal Excise Tax Return.
Before you can deposit taxes using EFTPS, you must enroll either online at www.eftps.gov or by completing Form 9779 (EFTPS-Business Enrollment Form) and mailing it to the EFTPS enrollment center. However, we recommend enrolling online as it is more convenient and much quicker than filing Form 9779. (You can expect to receive online confirmations in 15 business days, compared to the 10 weeks sometimes required for paper applications).
To enroll online, you will need to have the following information available:
· Employer Identification Number (EIN).
· Banking account number and routing number.
· Business name, address, and phone number as it appears on IRS tax documents.
When the enrollment process is completed, you will receive two separate mailings. One will have a confirmation/update form and a step-by-step instruction booklet. The other will be a letter that includes an enrollment trace number, a personal identification number (PIN), and instructions on how to obtain an Internet password. Upon receiving the PIN, you may begin making payments by phone. To make payments online you will need to first follow the instructions and obtain an Internet password.
We know changes can be difficult. Fortunately, using EFTPS has its benefits. Payments can be made 24 hours a day, 365 days a year, and they can be scheduled up to 120 days in advance of the desired payment date. EFTPS also provides a confirmation number, called an –EFT Number, which guarantees that the tax deposit has been scheduled and allows the transaction to be traced if necessary. The IRS claims that errors resulting in penalties are 31 times less likely for businesses using EFTPS.
Enrolling in EFTPS is not difficult, but it does take a while for the processing to be completed (about 15 days for online enrollment and up to 10 weeks for paper enrollment). Since 1/1/11 will be here before you know it, you’ll want to enroll as soon as possible.