Electronic Federal Tax Payment System (EPTPS)

This IRS has issued proposed regulations that would eliminate the use of paper coupons for deposit of employment taxes, corporate income and estimated taxes, and many other taxes (REG-153340-09). The paper coupon payment systems will be shut down at the end of this year.

With this change, taxpayers will be required to use the IRS' Electronic Federal Tax Payment System (EPTPS) to make federal tax deposits of various withheld and estimated taxes.

Some businesses paying a minimal amount of tax could however, continue to make their payments with the related tax return instead of using EFTPS. For example, employers with a deposit liability of less that $2,500 for a return period can remit employment taxes with their quarterly or annual return.

The EFTPS system does provide substantial benefits to taxpayers. EFTPS users can make tax payments 24 hours a day, 7 days a week from anywhere. Deposits can be made on line or by telephone.

Click here for a list of required taxes to be deposited electronically as outlined in the proposed regulation.

As proposed, the new rules would be effective for payments made on or after the date the final regulations are published in the Federal Register, but no earlier than January 1, 2011, and the IRS says it expects to finalize the regulations before then.

The IRS has invited comments on the proposal, which can be submitted electronically at regulations.gov. A public hearing will be held at the IRS Building in Washington on September 21.

For further information and clarification on these matters, please contact Cheryl A. Prout, CPA and Partner at (716) 250-6600.