Monday, December 13, 2010

New IRS Payroll Tax Payment Requirements – Immediate Attention is Required

Effective January 1, 2011, businesses with a payroll tax deposit are required to make those payments by using the Electronic Federal Tax Payment System (EFTPS). If you are not currently enrolled in the EFTPS program you probably received a letter regarding this in the last week. A 10% penalty may be applied if EFTPS is not used in 2011.

We can answer any of your questions and help you set up the EFTPS program. Call us at 800-560-4NFS immediately. The approval process can take 4-6 weeks. We can initiate this on-line. We will need the following information – business name, address, EIN, bank name, routing #, account #, and authorized signer.

We have found that the EFTPS system works much better than the old system of depositing the payroll taxes at the bank – you can schedule payments from any computer with internet access. The only drawback is you cannot wait until the day the taxes are due to schedule a payment. You must schedule your payments by the day before the due date and the money is transferred from your checking account on the due date that you schedule.

We recommend that semi-weekly depositors schedule their payments the day the payroll is computed and that monthly depositors schedule their deposit when they run their first payroll of the following month. Schedule these payments in advance as we have found that those who wait until the deadline tend to miss deadlines and incur penalties.

Employers who have $2,500 or less in quarterly payroll tax liability and pay their liability when filing their tax returns (i.e. Forms 941 or 944) are the primary exception. Otherwise, employers and sole proprietors who file payroll tax returns must use the EFTPS System.

Do not procrastinate in initiating the application process or you will incur penalties in 2011.

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