June 02, 1997
Businesses Have More Time to
Begin Electronic Payments
WASHINGTON - The Internal Revenue Service announced today that
it will not impose penalties through December 31, 1997, on
businesses that make timely deposits using paper federal tax deposit
coupons while converting to the new electronic payment system.
Under the law, taxpayers with more than $50,000 of federal
employment tax deposits in 1995 are required to enroll in the
Electronic Federal Tax Payment System (EFTPS) and to deposit
electronically by July 1, 1997.
Acting Commissioner of Internal Revenue Michael P. Dolan said,
"We understand that many taxpayers who have not enrolled in EFTPS
may need more time to learn about making electronic tax payments.
So, we have decided to take yet another step to help them make the
switch comfortably and confidently."
The additional 10 percent penalty for not depositing
electronically will be waived through December 31, 1997. However,
deposits must still be made on time even when paper coupons are
used, in order to avoid a late deposit penalty.
The IRS encourages businesses to use this additional time to
get acquainted with EFTPS. Making EFTPS payments successfully will
show businesses that they are correctly enrolled and that their
payments can be processed without error. "If businesses encounter
any problems, they will have time to get help and make adjustments,
rather than face a penalty. They will also obtain a better
understanding of the advantages of EFTPS," said Dolan.
EFTPS eliminates most of the paperwork in the old federal tax
deposit (FTD) coupon system. With EFTPS, deposits may be made by
telephone or personal computer. This means no more trips to the
bank to deliver FTD coupons and checks. EFTPS is fast, convenient
Over 1.1 million of the almost 1.2 million businesses that are
required to begin using the EFTPS system by July 1 have already
enrolled in the system. Another 400,000 businesses, not included in
the 1.2 million businesses required to use EFTPS, have enrolled in
the system voluntarily. Through last week, more than $100 billion
has been collected through EFTPS.
"We owe a lot of gratitude to the two Treasury Financial Agents
-- First National Bank of Chicago and NationsBank -- as well as the
banking and payroll community, professional tax preparer
associations, business associations and many others for their
assistance. The fact that so many businesses have already enrolled
in EFTPS is a tribute to their efforts," said Dolan.
In conjunction with today's announcement, the IRS addressed
some common misunderstandings about EFTPS. Use of EFTPS does not
give the IRS access to the business' bank account. In fact, the
taxpayer controls the amount of money transferred and when those
funds are transferred.
Second, EFTPS does not change the tax due date. Although the
taxpayer must notify the bank or the Treasuryþs Financial Agent to
make the transfer a day before the payment due date, the funds do
not move until the due date.
Third, EFTPS is easy to use and does not require special
electronic equipment. It can be as simple as making a phone call.
There is no equipment required other than a telephone -- a rotary
dial telephone is fine. Also, for taxpayers who want to use a
computer to transfer the funds, the Financial Agents will even
supply the software.
Fourth, EFTPS reduces the complexity of making tax payments. A
simple phone call transfers the funds. It takes far less time than
writing out a check, filling out a coupon and walking or driving to
the bank to make the deposit.
For information on EFTPS or to get an enrollment form, call
EFTPS Customer Service at (800) 555-4477 or (800) 945-8400.
Taxpayers can begin using EFTPS as soon as they receive their
payment instruction packet and personal identification number.
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