By: John Smolke and Jim Schneidmiller, Tax Partners
and David Lowen as contributing author
Do you make federal tax deposits using Form 8109 payment coupons? Did you know that as of December 31, 2010, financial institutions will no longer accept tax deposits made with these coupons?
Many businesses, private foundations, and others have used federal tax deposit (FTD) coupons to deposit their federal taxes with the IRS. They use the coupons to pay payroll taxes, corporate taxes, private foundation excise taxes, and many other types.
This year, the Financial Management Service (part of the Treasury Department) made a decision to discontinue the system that processes FTD coupons. Therefore, the IRS has chosen to eliminate the use of paper-based FTD coupons for all deposits and payments made after December 31, 2010.
There is an exception for very small payments, which may be included with a tax return. The maximum amount of this exception varies by type of tax, but all max out at only a few hundred dollars. All other taxpayers who previously used a deposit coupon will now be required to make their payments electronically using the Electronic Federal Tax Payment System (EFTPS). EFTPS is a free service maintained by the Treasury Department that allows taxpayers to make payments online or by phone at any time. It also allows taxpayers to schedule payments up to 365 days in advance. In addition to business and private foundation taxes, EFTPS can also be used by individual taxpayers to make their estimated tax payments.
Many businesses and private foundations are already using EFTPS. If that is your case, you do not need to take any action. However, if you are not registered for EFTPS at this time, you must enroll soon. Using EFTPS is quick and easy, but it takes several weeks to get registered, so it cannot be done at the last minute before a deadline.
To enroll, simply go to www.eftps.gov and click on Enrollment, and enter the requested information. You’ll need your tax identification number (SS# or EIN#), name and address as they appear on your tax return, bank routing number, and the account number for the account that will be used to make payments. Once you enroll, you’ll be sent a PIN and instructions in the mail, which you can then use to select a password for login to EFTPS.
###
To learn more about how Peterson Sullivan can assist with tax planning and other accounting services, please contact marketing@pscpa.com or call 206-382-7777. We welcome your comments or questions about this article or other tax issues.
