EFTPS is short for Electronic Federal Tax Payment System, a free service offered by the U.S. Dept. of Treasury that allows taxpayers to make tax payments online or over the phone. The IRS now requires most businesses to now make their federal tax deposits via EFTPS.
Convenience is one of the biggest advantages of EFTPS. The security of private information and financial transactions is ensured through password, use of a PIN (Personal Identification Number) and an EIN (Employer Identification Number), and a secure website.
Once enrolled, a taxpayer gives instructions for the transfer of funds from a personal or business bank account to the U.S. Dept. of Treasury account for the federal tax payment. Regardless of when the instructions are given, the transfer of funds takes place only on the specified date. The payer receives an acknowledgment number that serves as a receipt of payment. The transfer of funds will be confirmed by a bank statement.
The EFTPS is open around the clock, seven days a week. Tax payments can be scheduled as many as 120 days in advance. It is possible to either cancel or alter the scheduled payments up to two days prior to the specified date of transfer. For timely payment of taxes with EFTPS, the instructions for funds transfer should be given at least one day prior to the due date by 8 p.m. eastern time.
Some of the business taxes payable via EFTPS include:
- 941 Federal Liability (federal withholding, Medicare and Social Security)
- 1120 Corporate Income Tax, 945 Withheld Federal Income Tax on Nonpayroll Payments,
- 720 Federal Excise Tax,
- 944 Federal Liability (employers with $1,000 or less in total federal withholding, Medicare, and Social Security)
- 940 Federal Unemployment Tax.