Effective December 31, 2010 taxpayers may no longer deposit federal taxes (payroll and/or corporate taxes) at their bank.  One local bank has already stopped accepting federal tax payments.

If you are required to make tax payments throughout the year which do not accompany a tax return (i.e. quarterly corporate estimates, monthly or weekly 941 payroll tax deposits, periodic federal unemployment tax payments) you must sign up with EFTPS, the Electronic Federal Tax Payment System, and initiate your payments through them.  The payments will be drafted out of a specified bank account rather than being paid by check.  There is no fee for using EFTPS and we have had many clients using it for years with very few problems.

When you sign up you are assigned a PIN number (and an Internet password if applicable) and may then either call payments in using a touch-tone telephone or enter the payment information online via the EFTPS website.  You must initiate tax payments in advance to be withdrawn on a specific future date (i.e. you calculate your payroll today but don’t want the payment to be withdrawn from your account until next Wednesday, the due date for the payment).  You must always initiate payments at least one day before they are due. Each time you make a payment you will be given an acknowledgement number which will serve as your proof of the date and time you initiated that payment.  You must be sure to have sufficient funds in the specified account to cover the payment on the date you want the amount withdrawn, and be sure to deduct each payment from your checkbook balance (since you will no longer be writing a check).  Some clients have chosen to set up a separate bank account for tax payments but that is not required.

If you want more information about using EFTPS please visit their website at www.eftps.gov or call 1-800-555-4477.  If you will be calling your tax payments in by phone rather than using their website we have a “fill-in-the-blank” worksheet which you can use to organize your deposit information before you call and on which you may record the acknowledgement number you will be given at the end of each call.

*** We suggest you go ahead and get your EFTPS information set up now even if you do not start using it until later this year.  It takes a few days for the bank information to be verified and it may be a few weeks before your first payment can be made using EFTPS.

North Carolina Department of Revenue has a similar procedure for making tax payments if you would like to start remitting state taxes electronically.  Information regarding the state program can be found on their website at www.dor.state.nc.us/electronic/business.

If you have questions, please send us an email or call us at 919-383-5826.