The Electronic Federal Tax Payment System (EFTPS) is being phased in to replace the
TAXLINK System. With EFTPS your tax payment will move electronically from your bank
account and the IRS will automatically update your records. It applies to both business
taxpayers and individuals.
EFTPS Questions and Answers
Publication 966a
IRS delays penalty for failure to make deposits using EFTPS.
Download Publication 966
EFTPS: Electronic Federal Tax Payment System: Answers to the Most Commonly Asked
Questions
Background information on EFTPS
is available for viewing on our site.
Question and Answer Categories:
Description of EFTPS
What is EFTPS?
What is a Treasury Financial Agent?
Has EFTPS been tested?
Does a taxpayer have to open a bank account with First National Bank of
Chicago or NationsBank to use EFTPS?
What federal tax deposits must a taxpayer make through EFTPS?
What is the difference between TAXLINK and EFTPS?
Return to Question and Answer Categories
Legislative Establishment of Electronic Deposit Obligations
Why does IRS require certain taxpayers to make their federal tax
deposits electronically?
Why do certain taxpayers have to begin using EFTPS beginning in 1997?
Are there any exemptions from enrollment in EFTPS in 1997 for taxpayers
with a 1995 tax deposit obligation of more than $50,000?
Return to Question and Answer Categories
EFTPS Enrollment Process
How does a taxpayer enroll in EFTPS?
How does a taxpayer get an enrollment form?
How long does it take to enroll in EFTPS?
Will payroll processing companies enroll taxpayers in EFTPS?
If a taxpayer does not understand the enrollment process, form or
instructions, what should the taxpayer do?
Return to Question and Answer Categories
EFTPS Payment Options: ACH Credits and Debits
What options are available to taxpayers to pay their taxes under EFTPS?
What does ACH mean?
How do taxpayers initiate payment using the ACH Debit option?
Are there safeguards to prevent parties other than the taxpayer,
including the IRS, from initiating an ACH Debit from the taxpayer's bank account?
How do taxpayers initiate payments using the ACH Credit option?
How can a taxpayer verify to the IRS that a payment was made through
either an ACH Debit or an ACH Credit?
How can taxpayers establish that a federal tax deposit was timely
initiated to avoid penalties if they use ACH Debit or Credit?
What fees must a taxpayer pay to use EFTPS?
Are there payment options for EFTPS taxpayers other than ACH Credits
and Debits?
Return to Question and Answer Categories
Small Businesses and EFTPS ?
Did the IRS try to exclude the smallest businesses from being required
to enroll in EFTPS?
Does a small business have to buy new equipment to use EFTPS?
Do any small businesses voluntarily use TAXLINK to make federal tax
deposits?
Return to Question and Answer Categories
Where to Call for Additional Help ?
First National Bank of Chicago and NationsBank provide EFTPS customer service to answer
taxpayer questions on the enrollment and payment processes. You can call either bank for
information.
NationsBank: 1-800-555-4477
First National Bank of Chicago: 1-800-945-8400
Return to Question and Answer Categories
Questions and Answers on EFTPS ?
1.Q. What is EFTPS?
1.A. EFTPS is a system for initiating tax payments electronically. It is operated by
First National Bank of Chicago and NationsBank on behalf of the Department of the
Treasury. EFTPS continues the process of transforming the current paper based Federal Tax
Deposit ("FTD") coupon system to a more efficient electronic system. EFTPS is
thus a paperless system to make tax payments it is not a paperless system for filing tax
returns.
Return to Description of EFTPS
Return to Question and Answer Categories
Questions and Answers on EFTPS ?
2.Q. What is a Treasury Financial Agent?
2.A. The Treasury Department contracted with NationsBank and First National Bank of
Chicago to function as Treasury Financial Agents in managing EFTPS. The two banks enroll
taxpayers in EFTPS, provide customer service in the enrollment and payment processes,
direct payments in a timely manner to the government account, and provide tax payment
information to the IRS to update taxpayers' tax accounts.
Return to Description of EFTPS
Return to Question and Answer Categories
Questions and Answers on EFTPS ?
3.Q. Has EFTPS been tested?
3.A. Yes. EFTPS has undergone extensive testing, including security testing, by the
government and an independent contractor. For taxpayers choosing the ACH Debit payment
option (described below), First National Bank of Chicago or NationsBank will do an
additional test by sending a zero balance transaction through EFTPS before they even send
a personal identification number to the taxpayer to ensure the system is working correctly
for that taxpayer. A taxpayer should check to see if their bank will do this kind of test
for an ACH Credit payment (described below).
Return to Description of EFTPS
Return to Question and Answer Categories
Questions and Answers on EFTPS ?
4.Q. Does a taxpayer have to open a bank account with First
National Bank of Chicago or NationsBank to use EFTPS?
4.A. No. NationsBank and First National Bank of Chicago never receive a taxpayer's tax
deposits. Tax deposits flow directly from the taxpayer's bank account to the federal
government's account.
Return to Description of EFTPS
Return to Question and Answer Categories
Questions and Answers on EFTPS ?
5.Q. What federal tax deposits must a taxpayer make through
EFTPS?
5.A. Taxpayers required to use EFTPS must make the same federal tax deposits through
EFTPS that they would have made by using paper FTD coupons.
Return to Description of EFTPS
Return to Question and Answer Categories
Questions and Answers on EFTPS ?
6.Q. What is the difference between TAXLINK and EFTPS?
6.A. TAXLINK is the currently operating system for the electronic deposits of federal
taxes. Although only 1,500 businesses prior to January 1997 have been required to
participate in TAXLINK, another 64,000 businesses have voluntarily enrolled because it
provides a much improved and easier method for making tax deposits. EFTPS builds upon the
advantages of TAXLINK but is capable of handling a significantly larger number of tax
payments. EFTPS also incorporates many of the suggestions of taxpayers, practitioners, and
private sector groups currently using TAXLINK. The IRS will assist TAXLINK participants to
transfer gradually to EFTPS, since EFTPS will ultimately replace TAXLINK.
Return to Description of EFTPS
Return to Question and Answer Categories
Questions and Answers on EFTPS ?
7.Q. Why does IRS require certain taxpayers to make their federal
tax deposits electronically?
7.A. Section 6302(h) of the Internal Revenue Code requires the IRS to establish a
system for taxpayers to make their federal tax deposits electronically rather than use
paper FTD coupons. Section 6302(h) requires an increasing number of taxpayers to deposit
their federal taxes electronically during the years 1994-1999. Because of the legislative
structure for this phase-in of deposits, there is a substantial increase in the number of
taxpayers who must begin making deposits electronically in 1997.
Return to Legislative Establishment of Electronic
Deposit Obligations
Return to Question and Answer Categories
Questions and Answers on EFTPS ?
8.Q. Why do certain taxpayers have to begin using EFTPS beginning
in 1997?
8.A. To meet the phase-in requirements of section 6302(h), all taxpayers who had a
yearly employment tax obligation of more than $50,000 in 1995 are subject to the
semi-weekly deposit rules and must begin making federal tax deposits electronically in
July 1997.
Return to Legislative Establishment of Electronic
Deposit Obligations
Return to Question and Answer Categories
Questions and Answers on EFTPS ?
9.Q. Are there any exemptions from enrollment in EFTPS in 1997
for taxpayers with a 1995 tax deposit obligation of more than $50,000?
9.A. No. There are no exemptions for these taxpayers in 1997 or beyond.
Return to Legislative Establishment of Electronic
Deposit Obligations
Return to Question and Answer Categories
Questions and Answers on EFTPS ?
10.Q. How does a taxpayer enroll in EFTPS?
10.A. To enroll in EFTPS, a taxpayer must fill out an enrollment form (Form 9779) to
use EFTPS and send the form to the address designated in the form's instructions. After
processing, taxpayers will receive payment instructions and personal identification
numbers to begin making payments.
Return to Enrollment Process
Return to Question and Answer Categories
Questions and Answers on EFTPS ?
11.Q. How does a taxpayer get an enrollment form?
11.A. The IRS sent letters, enrollment forms, and instructions in late June/early July
to 1.2 million taxpayers who are required to enroll in EFTPS. Taxpayers may also receive
enrollment forms by calling either 1-800-555-4477 or 1-800-945-8400.
Return to Enrollment Process
Return to Question and Answer Categories
Questions and Answers on EFTPS ?
12.Q. How long does it take to enroll in EFTPS?
12.A. It will take approximately 2-10 weeks after NationsBank and First National Bank
of Chicago receive the enrollment form from the taxpayer to complete the enrollment
process and send to the taxpayer a personal identification number and payment
instructions.
Return to Enrollment Process
Return to Question and Answer Categories
Questions and Answers on EFTPS ?
13.Q. Will payroll processing companies enroll taxpayers in
EFTPS?
13.A. Generally yes but check with the payroll processing company. If a taxpayer's
payroll processing company does not make all of the taxpayer's federal tax deposits, the
taxpayer must enroll in EFTPS to make the remaining deposits.
Return to Enrollment Process
Return to Question and Answer Categories
Questions and Answers on EFTPS ?
14.Q. If a taxpayer does not understand the enrollment process,
form or instructions, what should the taxpayer do?
14.A. The taxpayer should call 1-800-555-4477 or 1-800-945-8400 (either number) the
same toll-free numbers listed on the enrollment form under "EFTPS Customer
Service."
Return to Enrollment Process
Return to Question and Answer Categories
Questions and Answers on EFTPS ?
15.Q. What options are available to taxpayers to pay their taxes
under EFTPS?
15.A. The primary options are ACH Credits and ACH Debits. A taxpayer may choose either
or both options and change his/her option choice at any time by contacting NationsBank or
First National Bank of Chicago.
Return to Payment Options
Return to Question and Answer Categories
Questions and Answers on EFTPS ?
16.Q. What does ACH mean?
16.A. ACH means Automated Clearing House. ACH is the financial network run by the
Federal Reserve to transfer funds electronically. ACH is widely used by the financial
community to transfer funds, for example, for the direct deposits of wages and social
security payments.
Return to Payment Options
Return to Question and Answer Categories
Questions and Answers on EFTPS ?
17.Q. How do taxpayers initiate payments using the ACH Debit
option?
17.A. Taxpayers initiate payments using the ACH Debit option by instructing NationsBank
or First National Bank of Chicago to institute an ACH Debit. The taxpayers' banks actually
withdraw funds from their bank accounts for payment to the government's account. Taxpayers
can instruct First National Bank of Chicago or NationsBank by calling the banks' toll-free
numbers and either talking to a customer service representative or using the automated
touch-tone telephone system. Taxpayers can also use their personal computers to initiate
payments (NationsBank or First National Bank of Chicago will send to the taxpayers
Windows-based software if they want to use a personal computer).
Return to Payment Options
Return to Question and Answer Categories
Questions and Answers on EFTPS ?
18.Q. Are there safeguards to prevent parties other than the
taxpayer, including the IRS, from initiating an ACH Debit from the taxpayer's bank
account?
18.A. Yes. First National Bank of Chicago and NationsBank will institute a transaction
with the taxpayer's bank only after receiving instructions from the taxpayer. The two
banks will not initiate an ACH Debit without the taxpayer's identification number (TIN)
and the taxpayer's personal identification number (PIN). Although the TIN identifies the
proper taxpayer account for recording the tax information with the IRS, the IRS does not,
and will not, have any of the EFTPS PIN numbers.
Return to Payment Options
Return to Question and Answer Categories
Questions and Answers on EFTPS ?
19.Q. How do taxpayers initiate payments using the ACH Credit
option?
19.A. Taxpayers must first determine if their banks can initiate an ACH Credit.
Taxpayers making a federal tax deposit using the ACH Credit option instruct their banks to
withdraw funds from their bank accounts for payment to Treasury's account. Different banks
may have different requirements for taxpayers to initiate a credit transaction (e.g., by
telephone, personal computer, personal visit). Taxpayers must contact their banks to
determine the bank's required procedure.
Return to Payment Options
Return to Question and Answer Categories
Questions and Answers on EFTPS ?
20.Q. How can a taxpayer verify to the IRS that a payment was
made through either an ACH Debit or an ACH Credit?
20.A. The IRS will accept as proof of payment a copy of the taxpayer's bank statement
or other bank records that (1) identifies the U.S. government as the payee, (2) shows a
withdrawal from an account with a sufficient level of funds to cover the taxpayer's
deposit, and (3) that the payment had not been reversed or returned.
Return to Payment Options
Return to Question and Answer Categories
Questions and Answers on EFTPS ?
21.Q. How can taxpayers establish that a federal tax deposit was
timely initiated to avoid penalties if they use ACH Debit or Credit?
21.A. Taxpayers can establish that a federal tax deposit was timely initiated by using
the records of either their bank or the Treasury Financial Agent and/or the taxpayers'
books and records to establish that they timely initiated an ACH Debit or Credit (this
would include the acknowledgment number from a Treasury Financial Agent). The records must
show that the taxpayer had sufficient funds to pay the applicable tax.
Return to Payment Options
Return to Question and Answer Categories
Questions and Answers on EFTPS ?
22.Q. What fees must a taxpayer pay to use EFTPS?
22.A. Neither the IRS nor the Treasury's financial agents charge fees for either ACH
Credits or Debits. Depending upon the taxpayer's banking arrangements, a taxpayer's bank
may charge a fee for ACH Debit and Credit transactions. Taxpayers should consult their
banks to determine what fees may be charged.
Return to Payment Options
Return to Question and Answer Categories
Questions and Answers on EFTPS ?
23.Q. Are there payment options for EFTPS taxpayers other than
ACH Credits and Debits?
23.A. Yes. While ACH will generally be the payment mechanism for all EFTPS payments, in
some instances a business may find it necessary to make a wire payment from their bank on
the deposit due date. Further information on the use of these wire payments will be
provided in the taxpayer's enrollment confirmation package.
Return to Payment Options
Return to Question and Answer Categories
Questions and Answers on EFTPS ?
24.Q. Did the IRS try to exclude the smallest businesses from
being required to enroll in EFTPS?
24.A. Yes. The EFTPS phase-in is designed to exclude businesses with the smallest
payrolls. For example, only 1.2 million employers of a total 5.2 million employers with
federal employment tax liabilities must use EFTPS beginning in 1997.
Return to Small Businesses and EFTPS
Return to Question and Answer Categories
Questions and Answers on EFTPS ?
25.Q. Does a small business have to buy new equipment to use
EFTPS?
25.A. No. If a small business chooses the ACH Debit option, the taxpayer can initiate a
payment with even a rotary phone by calling a toll-free number at First National Bank of
Chicago or NationsBank to talk to a customer service representative. The taxpayer can also
use a toll-free automated touch-tone telephone system or their personal computer
(NationsBank or First National Bank of Chicago will send to the taxpayer Windows-based
software if a taxpayer wants to use a personal computer).
Return to Small Businesses and EFTPS
Return to Question and Answer Categories
Questions and Answers on EFTPS ?
26.Q. Do any small businesses voluntarily use TAXLINK to make
federal tax deposits?
26.A. Yes. In fact, TAXLINK customer service surveys show that small businesses are
strongly in favor of TAXLINK, because they no longer have to interrupt their business to
rush to the bank with their paper coupons to make tax deposits. EFTPS is even easier to
use than TAXLINK.
Return to Small Businesses and EFTPS
Return to Question and Answer Categories
Tax Topics & FAQs | Tax Help Archives | Home
