Filing Your Return(s) and Paying Taxes

Federal Tax Deposits (FTD)

In general, you must deposit income tax withheld and both the employer and employee social security and Medicare taxes (minus any advance EIC payments) by mailing or delivering a check, money order, or cash to an authorized financial institution or Federal Reserve bank. However, some taxpayers are required to deposit by electronic funds transfer.

When To Deposit

There are two deposit schedules--monthly or semiweekly--for determining when you deposit social security, Medicare, and withheld income taxes. These schedules tell you when a deposit is due after a tax liability arises (e.g., when you have a payday). Prior to the beginning of each calendar year, you must determine which of the two deposit schedules you are required to use. The deposit schedule you must use is based on the total tax liability you reported on Form 941 during a four-quarter look back period discussed below. Your deposit schedule is not determined by how often you pay your employees or make deposits.

For more information about when and how to deposit, see:

• Publication 15 Circular E, Employer's Tax Guide

 

EXPRESS ENROLLMENT FOR NEW BUSINESSES

Any business taxpayer that requests a new EIN and indicates they will have federal tax deposit obligations is pre-enrolled in EFTPS.

 

If you are expressed enrolled you will receive information in your EIN package informing you that your business has been expressed enrolled in EFTPS and it contains one Federal Tax Deposit (FTD) coupon.  In a separate mailing you will receive an EFTPS Confirmation Package with your EFTPS PIN and how to activate you EFTPS express enrollment.  Once you have received the EFTPS Confirmation Package use the following steps to activate your enrollment.

 

 

 

These are the steps to activate an EFTPS enrollment:

 

Call 1-800-555-3453.

 

1. Enter your financial institution information (bank and account number)

2. Choose if you want your bank to verify that the account number you entered is a valid number

 

NOTE: If you wish not to have your bank account number verified, you can begin making payments after all the activation steps have been completed. If you wish to have your account verified, it will delay making a payment by 6-10 business days. You are responsible for the accuracy of the number entered. If it is incorrect, your financial institution may return your payment and you may incur an IRS penalty for late payment.

 

3. Authorize withdrawals of electronic payments from your account

4. Enter your phone number

5. Write down the confirmation number

6. The voice response system will offer you the option of obtaining an Internet Password so you can make payments online

7. Within 7-10 days you will receive an EFTPS Confirmation/Update Package by mail that contains a Confirmation/Update Form, an EFTPS Payment Instruction Booklet and an Internet Password Brochure

 

Making Deposits With Paper FTD Coupons.

You received one (Form 8109) Federal Tax Deposit Coupon in your EIN package. You have the option to order FTD coupons if you want to make additional payments by check, but you will need to allow 5-6 weeks for coupons to arrive by mail. The number to call for ordering coupons is 1-800-829-4933.

 

If you are using a payroll company, accountant, or third party to make your federal tax payments on your behalf  you will need to provide/redirect the FTD coupon book to them. The coupon book is mailed to the address of record (business address) unless another mailing address is specified by the taxpayer.

 

If you physically provide or mail the FTD coupon book to your Third party, without changing the mailing address, future FTD coupon books will continue to be mailed to your address of record. Please use the Form 8109C in the front of the coupon book to change the mailing address so future FTD coupon books are mailed to your representative. Even if you decide to continue using coupons, we encourage you to activate your EFTPS enrollment now so that you can make timely payments in the meantime or anytime in the future when you are without FTD coupons.

If you are not making deposits by EFTPS, use Form 8109, Federal Tax Deposit (FTD) Coupon, to make the deposits at an authorized financial institution or Federal Reserve bank.

It is very important to clearly mark the correct type of tax and tax period on each FTD coupon.

Importance of Timely Deposits

If you do not timely pre-pay your tax using deposit coupons or if you were not required to make any deposit and/or did not include your payment when you filed your return, we will charge you interest and penalties on any unpaid balance.

We may charge you penalties for not depositing employment taxes timely, depending upon how many days late you make the deposit. For more information on penalties for late deposits, see Publication 15, Employers Tax Guide.

If you do not pay withheld trust fund taxes, we may take additional collection action.

• We can require you to file and pay your taxes on a monthly rather than quarterly basis.
• We can also require you to open a special bank account and deposit the amounts required to be withheld within two banking days after you pay wages to your employees. If, after you are required to do so, you do not open a special account and make timely deposits, you may be found guilty of a misdemeanor.

To encourage prompt payment of withheld income and employment taxes, including social security and railroad retirement taxes or collected excise taxes, Congress passed a law that provides for the "trust fund recovery penalty." This penalty is used as a tool for collection of unpaid employment taxes. The penalty also applies to those excise taxes which are commonly referred to as collected excise taxes.

If you are the "responsible person," we can apply this penalty against you immediately after you do not pay trust fund taxes in response to a notice and demand for payment. A responsible person is the person responsible for collecting, accounting for and paying withheld trust fund taxes. Also, we can apply this penalty regardless of whether you are out of business or without assets.

Caution: Once we assert the penalty, we can take collection action against your individual assets, such as filing a Federal tax lien if you are the responsible person(s).

Important References:

Form 8109 Federal Tax Deposit Coupon
Publication 15 Circular E Employers Tax Guide
Publication 4275 - Express Enrollment for New Businesses

Web Link:

EFTPS Online