The IRS has issued proposed regulations that will eliminate paper coupons for deposits of employment taxes, corporate income and estimated taxes, and many other taxes. The paper coupon payment system will be discontinued as of December 31, 2010.
Taxpayers will be required to use the IRS’ Electronic Federal Tax Payment System (EFTPS) to make federal tax deposits of various withheld and estimated taxes. Currently over 97.5% of all federal tax deposits are already deposited electronically through EFTPS.
The proposed regulations will require the following taxes to be deposited electronically:
- Corporate income and corporate estimated taxes
- FICA taxes and withheld income taxes
- Federal Unemployment Tax Act (FUTA) taxes
- Unrelated business income taxes of tax-exempt organizations
- Private foundation excise taxes
- Taxes withheld on nonresident aliens and foreign corporations
- Estimated taxes on certain trusts
- Railroad retirement taxes
- Nonpayroll taxes, including backup withholding
- Excise taxes reported on Form 720, Quarterly Federal Excise Tax Return
The proposed regulations do continue the exception for businesses that are depositing a minimal amount of withheld income and FICA taxes. Businesses that qualify can make their payments with their tax returns. Employers with a deposit liability of less than $2,500 for a return period can remit employment taxes with their quarterly or annual return.
Deposits can be made online at www.eftps.gov or by telephone at 800-555-4477 (businesses) or 800-316-6541 (individuals). The system helps taxpayers schedule dates to make payments even when they are out of town or on vacation when a payment is due. EFTPS business users can schedule payments up to 120 days in advance of the desired payment date.
If you have any questions or would like more information, please contact:
Matt Masters
302-656-6632
MMasters@CoverRossiter.com