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EFTPS changes as of January 1, 2011

For all companies that are currently using paper coupons to deposit their federal taxes, an important change is occurring on January 1, 2011. Paper coupons will no longer be allowed, and companies must be prepared to deposit their federal taxes by telephone or by using the Electronic Federal Tax Payment System (EFTPS). This applies only to Federal Tax Deposits (Form 8109), and does not alter whether the deposit is on a monthly or semiweekly basis.

The following taxes must be deposited using EFTPS:

• Corporate income and estimated taxes
• Tax-exempt organization unrelated business income taxes
• Private foundation excise taxes
• Taxes withheld on nonresident aliens and foreign corporations
• Estimated taxes on certain trusts
• Federal employment taxes, including FICA taxes, railroad retirement taxes, and income tax withholding
• Nonpayroll taxes, including backup withholding
• Federal Unemployment Taxes Act (FUTA) taxes
• Excise taxes reported on Form 720 (Quarterly Federal Excise Tax Return)

With this pending change, it is important to enroll in the EFTPS program immediately if you are not already using it. Enrolling online can be done at www.eftps.gov. An alternative method is to complete Form 9779 and mail it into the EFTPS enrollment center. Enrolling online usually takes about 15 days, while mailing Form 9779 can take up to 10 weeks. To enroll in the EFTPS, businesses must provide their employer identification number, bank account and routing numbers, business name, business address, and business phone number.

After enrollment, the business will be mailed a confirmation form and instructions on how to use EFTPS to pay their federal tax payments. Within these mailings is a Personal Identification Number (PIN) that allows the business to pay its taxes by phone. To pay on the internet, follow the instructions in the mailed manual.

EFTPS has a number of advantages. Businesses can access payments at all times, and payments can be scheduled up to four months in advance. It also allows for easier and more efficient tracking of payments. According to the IRS, errors are 31 times less likely to happen if using the EFTPS system. If your business is not already using the EFTPS system, it is important to make this change as soon as possible.

For further information please contact Kim Haumann at 312-980-3249, Gina Mastrangeli at 312-980-3355, or your Blackman Kallick representative.

This publication is part of Blackman Kallick’s marketing of professional services, and is not written tax advice directed at the specific facts and circumstances of any person and/or entity. Contents of this publication are of a general nature, and you should not act on this information without obtaining professional advice from your business advisor that is appropriately tailored to your individual needs and circumstances. This written advice is not intended or written to be used, and cannot be used by any taxpayer, for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code.