The U.S. Treasury has adopted a new initiative to dramatically increase the number of electronic transactions for millions of citizens and businesses. It is expected to save more than $400 million and 12 million pounds of paper in the first five years alone. The system known as EFTPS, electronic federal tax payment system, will enhance customer service, increase reliability, and improve safety and security features for both recipients and taxpayers.
Businesses that are currently permitted to use paper Federal Tax Deposit coupons (form 8109-B) will have to make those deposits electronically beginning January 1, 2011. However, there are exceptions for businesses with $2,500 or less in quarterly tax liabilities that allow them to still pay the liability with their 941 quarterly forms. Individual taxpayers will also have the option to pay their quarterly estimated tax payments through EFTPS.
EFTPS is a free service offered by the U.S. Treasury and administered by a third party. EFTPS is available 24 hours a day 7 days a week. There are two ways to make a payment, over the phone or online. Enrollment can be done with a federal tax identification number, your bank account and routing numbers, as well as your name and address. Once the enrollment process is complete, it takes about seven to ten days for your account number to be mailed to you.
Failure to comply with EFTPS requirements could result in a 10% failure-to-deposit penalty. EFTPS allows taxpayers to schedule a payment 120 days in advance for businesses and 365 days for individuals. This feature should help prevent the failure to deposit penalties.
If you have any questions about EFTPS feel free to contact us.
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Blackman & Sloop is a full-service CPA firm headquartered in Chapel Hill, North Carolina and is actively involved in auditing, taxation, management consulting, financial planning, and related services. The firm directs a large part of its services toward providing management with advice on budgeting, forecasts, projections, financing decisions, financial analysis, and tax developments. The firm also performs review and compilation services and prepares not-for-profit, corporate, individual, estate, retirement plan, and trust tax returns as well as technology consulting services regarding installation and training on QuickBooks. Blackman & Sloop provides services in Raleigh, Durham, Chapel Hill, RTP, Hillsborough, Pittsboro, Charlotte, and the rest of North Carolina. To find out more please visit http://www.blackmansloop.com
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