Electronic Deposits of Federal Taxes Required in 2011

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If you deposit your federal employment taxes using Federal Tax Deposit Coupons, Form 8109, you must act now to be ready to change to electronic deposits, made via the Internet or telephone, which will be required starting January 1, 2011.

Both the online and the telephone payment options are available 24 hours a day, seven days a week. In addition, you can schedule your business’ tax deposit payments up to 120 days in advance. There are no fees for this service. In addition, according to IRS research, employers who pay electronically are 31 times less likely to make an error that results in interest or penalties than employers who use FTD coupons.

Warning: Payments must be scheduled by 8 p.m. ET the day before the due date to be received timely. So, if you have to make your monthly deposit for December payroll taxes on January 17, 2011, you must schedule your payment no later than 8 p.m. Eastern time on January 16, 2011.

Registering for the EFTPS

Although it is simple and speedy to make payments via the EFTPS, advance registration is required to use the system.

Act Now. There is a 10- to 15-day lag time between when you submit your registration information and your confirmation package arrives in the mail. So, if you will have to make a payroll tax deposit on January 17, 2011, you absolutely need to have started the process by December 31 (assuming that the holiday season does not delay the mail processing!)

In order to register, you need the following information:

  • your Taxpayer Identification Number (for business taxes, this is your Employer Identification Number; for personal taxes, it would be your Social Security number);
  • your financial institution’s routing number and your account numbers;
  • the exact spelling of your name and address as it appears on your IRS tax documents.

Although the payments can be made using the telephone, you must register using the Internet or snail-mail using Form 9779, Business Enrollment Form, or IRS Form 9783, Individual Enrollment Form. To register via the Internet, go to http://www.eftps.gov. To obtain the paper forms, call 800-555-4477 (for businesses) or 800-316-6541 (for individuals.)

After EFTPS processes your enrollment, you will receive two separate mailings. One will be a form that confirms your registration. The other will be a letter that includes your Personal Identification Number (PIN) for the system and instructions on how to obtain an Internet Password. Once you receive your PIN, you may begin making payments by phone. After you obtain your Internet Password, you may begin making payments via the Internet.

De Minimus Exception

There is a limited exception to the electronic payment requirement. Federal Tax Deposit Coupons will no longer be used after 2010 and payments must be made through the Electronic Federal Tax Payment System (EFTPS) unless the de minimus exception applies. If you have to deposit less than $2,500 of employment taxes (Social Security taxes, Medicare taxes, and withheld income taxes) in a return period, you do not have to use the online payment system (EFT). Instead, you have the option to:

  • remit employment taxes with your quarterly or annual tax return,
  • voluntarily make deposits by EFT, or
  • use other methods of payment as provided by the instructions relating to the return.

Source: Business Owners Toolkit


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