EFTPS, The Electronic Federal Tax Payment System is a free service from the U.S. Department of the Treasury. Want the ability to pay your personal or company’s federal tax obligations 24/7/365 online or by phone? Sick of having to make that 941 payroll deposit by 2 PM? EFTPS allows you to schedule payments in advance.
Traditionally, payments for Form 940, Form 941, Form 1040 and Form 1040-ES (estimated tax payments) had to made through a bank or mailed in to the IRS. Since no one wants to pay taxes early, this meant tight deadlines for a variety of tax payments.
EFTPS Advantages:
- You can schedule payments in advance. This translates into less stress and fewer late payments.
- 24/7/365 convenience. Eliminates the need for real time deposits via a bank.
- Security. I’ve never heard of a problem with EFTPS since its inception in 1996.
- Record keeping. The site keeps an 18 month history you can always access. An acknowledgment number can be printed while online, or it can be saved as a PDF file.
EFTPS Disadvantages:
- Enrollment. This takes a little time and planning. It requires an Internet password being mailed to you.
- The US Treasury Department has your checking account information. But you must initiate all transactions.
- Like any automated payment, it has to be factored into cash flow management somehow. We reccomend entering the payment into the QuickBooks bookkeeping, in advance for the anticipated date of withdrawal, when the EFTPS payment is scheduled.
Currently if a company’s tax liability exceeds $200,000 in a calendar year, it must use EFTPS to pay it. The IRS is pushing taxpayers into the computer age in many areas. CPAs expect required use of EFTPS to expand.
If you’d like a free initial consult on an accounting, tax or consulting issue, please consider calling us at (910) 399-2705. We’re a Wilmington NC CPA firm offering a unique blend of expertise and customized personal service.
