Secure Payment Service from U.S. Treasury Can Help Clients Avoid Penalties

The Electronic Federal Tax Payment System (EFTPS) offers businesses and individuals a secure and easy way to pay all federal taxes online or by phone—and helps them possibly avoid Internal Revenue Service penalties. The IRS estimates that nonusers of EFTPS are 31 times more likely to be assessed a penalty than users of EFTPS.

Here’s How It Works

EFTPS has a secure Web site, www.eftps.gov, through which taxpayers enroll. The enrollment process includes entering their tax ID number (TIN) and the bank account from which they will be paying their taxes. After enrolling, taxpayers will receive by mail their personal identification number (PIN) and instructions for obtaining their Internet password. Then they log on, enter their security information (the combination of TIN, PIN and Internet password), and make secure payments for any and all federal taxes, 24 hours a day, seven days a week. This service is free from the U.S. Department of the Treasury.

The system offers specific tools to help taxpayers avoid possible IRS penalties.

Schedule payments in advance: up to 120 days for businesses and 365 days for individuals. Cancel a payment up to 48 hours before the scheduled payment date. Receive an immediate acknowledgement number for every payment. Thoroughly review and verify all payment information before submitting the payment, to make sure no mistakes have been made. Review up to 16 months of EFTPS payment history online to confirm that payments have been made.

Any taxpayer that makes more than one federal tax payment per year should consider enrolling in and using EFTPS. If you make tax payments on behalf of your clients, you should consider using the free EFTPS batch provider software. With a new version scheduled for this fall, this software allows you to enroll clients and make up to 5,000 tax payments on a single transmission. Payments can be made from a master account or from each client’s account. This is an effective way to manage clients’ tax payment information.

Special Program for Business Taxpayers

The EFTPS Federal Tax Deposit (FTD) Penalty Refund Program offers business taxpayers who make payments with FTD coupons a way to receive a one-time penalty refund from the IRS. If taxpayers received a Form 941 FTD penalty beginning in calendar year 2003, they are eligible to receive a refund of the penalty if they enroll in EFTPS. To qualify for the refund, they cannot owe any other taxes and must use EFTPS for four consecutive quarters to make all Form 941 deposits on time. It is not necessary to file a claim for the penalty refund.

Letting Your Clients Know About EFTPS

The Treasury offers tax and accounting professionals free marketing materials that can be used to inform clients about EFTPS. These materials provide straightforward information about EFTPS for both businesses and individuals. Order free EFTPS brochures and enrollment forms at www.fms.treas.gov/eftps/practitioners_form.html.