Payroll alert: Feds make big push for EFTPS

IRS may not require all businesses to “go electronic,”  but soon using paper may be more trouble than it’s worth.
Here’s why: A growing number of banks are refusing to accept IRS’ paper coupons, Form 8109, Federal Tax Deposit Coupon, in favor of electronic payments. Over the past year, almost two dozen major banks and credit unions have stopped accepting the coupons – and more are certain to follow suit as the idea gains popularity, IRS representative Annette Dean said during a recent conference call.
Financial institutions aren’t required to accept the coupons (and IRS can’t force them to), so many are making the business decision to stop accepting coupons because they: 1) require exception processing, and 2) cost between $2 and $5 each to process.
Instead, IRS wants to help support Treasury’s electronic payment goal by encouraging small businesses that aren’t mandated e-filers to enroll in the Electronic Federal Tax Payment System (EFTPS).
Businesses that aren’t electronically depositing their tax deposits will feel subtle pressure from the feds as they continue educating employers about EFTPS. Plus, they may also end up frustrated as they search for a financial institution that will accept 8109s (or, even worse, find a bank that currently accepts coupons, only to discover that shortly it won’t).
It seems paper coupon holdouts don’t have much time or support left. In addition to financial institutions, IRS already has many large payroll processors in its corner: Most automatically remit the taxes through EFTPS for all clients. The agency’s hoping to steer the smaller service providers in the same direction with bulk processing.
Employers that want to continue paper filing but haven’t received a supply of pre-printed coupons from the agency can use Form 8109-B, available on IRS’ Web site.