Previously, once your business’s federal tax liability (including all taxes) during a calendar year exceeded $200,000 or your payroll tax deposits exceeded $50,000, you were required to use EFTPS or Electronic Federal Tax Payment System, in the second succeeding calendar year. However, under a proposed rule from the U.S. Treasury (REG-153340-09), any business with a tax deposit requirement would have to make deposits electronically as of January 1, 2011. The Financial Management Service (FMS), a Bureau of the Treasury Department, beginning in 2011, is eliminating the system that enables the processing of Federal Tax Deposit (FTD) coupons. Accordingly, these proposed regulations require the use of EFTPS for all FTDs, effective January 1, 2011, which is not that far away. Designated federal taxes include employment taxes, corporate income taxes, social security taxes, FUTA tax, excise taxes and various other types of non-payroll withholding.
EFTPS, or Electronic Federal Tax Payment System, is provided FREE by the U.S. Treasury Department for payment of federal taxes via the Internet or by phone 24/7. It is handled by a secure government website that uses the highest level of security. The system can only be accessed through a secure Internet browser with 128-bit encryption. When you enroll or to gain access to your account, you must provide three forms of unique information – a taxpayer identity (EIN or SSN), EFTPS Pin#, and a password. They claim it is secure, fast, accurate, convenient, easy to use and reduces penalties. Once enrolled, business taxpayers can use the system to make all their federal tax payments via the Internet or by phone. Both methods are interchangeable. Via the Internet you can initiate a tax payment 24 hours a day, 7 days a week. Also, you can conveniently schedule tax payments up to 120 days in advance of a tax due date. It takes about two weeks after you enroll to receive an enrollment confirmation, so plan ahead. For more information about enrolling in EFTPS, visit www.eftps.gov to get started.
So get ready to make the change and (maybe) get rid of those paper FTD coupons, you probably won’t be able to use them after the first of the year.