April 20, 2010

Most Businesses Required to Pay by EFT Beginning in 2011

Here is an article from the Payroll Guide Newsletter:

Most Businesses Required to Pay by EFT Beginning in 2011

The U.S. Department of the Treasury (DOT) has announced that businesses currently permitted to use paper Federal Tax Deposit (FTD) coupons will have to make those deposits electronically beginning in 2011 with few exceptions [DOT News Release TG-644, 4/19/10].

The major exception to the above rule will be for businesses with $2,500 or less in quarterly tax liabilities that pay their tax liability when they file their return.

A DOT spokesperson said that the DOT will soon be issuing a proposed rule on this topic which will include a public comment period before the regulation become final.

Currently, nearly 98% of all business tax dollars are paid electronically through the DOT's free Electronic Federal Tax Payment System (EFTS; see Payroll Guide ¶ 4289 ). IRS research has shown that businesses using EFTPS are 31 times less likely to make an error.

The new initiative is one of several in the DOT's plan to go green, a move that is expected to save more than $400 million and 12 million pounds of paper in the first five years alone. Another initiative will eliminate the option to purchase paper savings bonds through payroll deductions for federal employees on Sept. 30, 2010, and for the private sector by Jan. 1, 2011. This policy covers only paper savings bonds purchased through payroll sales. Individuals will still be able to purchase paper savings bonds at financial institutions for themselves and as gifts. © 2010 Thomson Reuters/RIA. All rights reserved.