Changes In Filing Payroll Tax

The IRS has announced that proposed regulations will expand the use of electronic payment systems for payroll and other tax payments, and discontinue the use of paper coupons next year.

What are Paper Coupons?

In the past, businesses could submit payroll tax payments using a paper coupon by taking the coupon to a bank along with a check for the payroll tax amount. The IRS says the paper coupon system will no longer be maintained by the Treasury Department after Dec. 31, 2010.

What is the New Electronic Payment System?

There is not a new system; the proposed regulations will require use of the existing federal tax deposit process, through the Electronic Federal Tax Payment System (EFTPS).

What is EFTPS?

The Electronic Federal Tax Payment System (EFTPS) was set up to provide taxpayers a way to make payments electronically, instead of mailing them. The IRS says that using EFTPS benefits users because they can make payments at any time, day or night, from anywhere, by computer or phone. EFTPS also reduces payment errors. And you can schedule payments up to 120 days in advance of the payment date.

How Do I Sign Up for EFTPS?

Since you will most likely have to stop using payment deposit coupons come January 1, 2011, it may benefit you to sign up now so you can become comfortable with the service. You can sign up by going to the the EFTPS website at www.eftps.gov or by calling EFTPS Customer Service at 1-800-555-4477. For more information on how to enroll and pay using EFTPS, see IRS Publication 4132 (PDF).