Federal tax payments are a necessary part of business and can sometimes be inconvenient. But, being able to pay all your federal taxes on a secure website makes tax remittance easier. EFTPS makes online payments possible for small business owners. What is EFTPS used for, and what does the acronym mean?
What does EFTPS stand for?
EFTPS is short for Electronic Federal Tax Payment System. It is a free service offered by the U.S. Department of the Treasury that allows you to pay federal taxes online or over the phone. EFTPS is used by businesses, individuals, federal agencies, tax professionals, and payroll services.
Convenience is one of the biggest advantages of EFTPS. And, security is ensured through a password, PIN (Personal Identification Number), and TIN (Taxpayer Identification Number).
Once enrolled, you give instructions to transfer funds from your bank account to the EFTPS.
EFTPS is open around the clock, seven days a week. You can do the following with EFTPS:
- Verify the bank account you will use to make payments
- Change the bank account
- Self-select your PIN
- Terminate an EFTPS enrollment you are no longer using
- Pay federal taxes
Taxes you can pay using EFTPS
You can use the Electronic Federal Tax Payment System to pay all federal taxes. The following payments are common to small business owners.
Estimated taxes: Unlike an employee, income taxes are not withheld from your salary. You must make estimated tax payments for your federal income tax liability. You can pay estimated taxes weekly, monthly, or quarterly using EFTPS.
Self-employment tax: Social Security and Medicare taxes are not automatically withheld from your salary. You must pay self-employment tax unless you are incorporated, which combines Social Security and Medicare taxes.
Payroll taxes: If you are an employer, you must withhold and remit income taxes from your employees’ wages. You also withhold employee portions of FICA tax from employee wages. FICA tax includes Social Security and Medicare taxes. You pay a matching amount of FICA tax for employee wages. You must also pay federal unemployment tax. You can use EFTPS to pay and remit FICA, income, and federal unemployment tax liabilities. A payroll service can use your EFTPS account to pay taxes for you.
Corporate taxes: If your business is is a corporation, you can use EFTPS to pay federal corporate taxes.
Excise tax: The government places excise taxes on certain goods, such as gasoline and alcohol. You do not directly pay excise taxes. Instead, you collect the tax from customers when you sell the applicable goods. You can use EFTPS to pay federal excise taxes online.
Enrolling in the Electronic Federal Tax Payment System
To access an account, you must enroll in EFTPS. Enrollment is a free and easy process.
If you are requesting a new Employer Identification Number (EIN) and indicate you will have federal tax payments, you are automatically pre-enrolled in EFTPS. The IRS will notify you about the pre-enrollment. Then, you can activate the account.
If you are not pre-enrolled, you can sign up directly on the EFTPS website or by calling the EFTPS.
You will need three pieces of information to enroll in EFTPS:
- A Taxpayer Identification Number (TIN): What is a TIN? The TIN can be your Social Security number (if you are a sole proprietor) or your business’s EIN.
- A bank account number and routing number: The bank account can be a personal or business bank account.
- Your name and address
To enroll in EFTPS, select “Enrollment” on the website. Since you are enrolling a business, select the “Business” option. Enter the requested information and submit the application.
The information you submit must be verified by the IRS. Once you complete the enrollment process, you will receive a PIN in the mail within five to seven business days.
To get a password for your EFTPS account, go to the website and click the “Login” button. Choose “Need a Password.” Enter your TIN and PIN number.
You must verify your bank information and enrollment number. The enrollment number can be found on the letter containing your EFTPS PIN. Once your information is verified, select “Next” and choose a password.
At that point, your account will be set up and you can use EFTPS to pay federal taxes.
Making payments with EFTPS
To make a payment, log into the EFTPS website and select “Make a Payment.” Follow the step-by-step instructions to complete the payment process.
You will receive a confirmation number that serves as a receipt of payment. Save a copy of the confirmation page for your records. You can review up to 16 months of your EFTPS payment history online or over the phone. The transfer of funds will show on your bank statement.
Money is transferred on the date that you specify. You can schedule tax payments up to 365 days in advance.
You can also cancel or alter scheduled payments up to two days before the date of a scheduled transfer. For timely tax payments with EFTPS, schedule the payment at least one day before the due date by 8 p.m. Eastern Time.
“EFTPS users can make payments 24 hours a day, 7 days a week—and schedule payments in advance,” writes Kay Bell, an award-winning journalist and tax blogger. “The online system also lets taxpayers review the last 16 months of their tax-payment history and search, print or download the data by date, tax type, amount, tax form and other factors.”
How you will be contacted
To avoid your confidential information getting into the wrong hands, be aware of what to expect when corresponding with EFTPS and the U.S. Department of the Treasury. The federal government will contact you by mail.
The U.S. Department of the Treasury will never contact you by email. If you receive an email claiming to be the EFTPS and it asks for personal information, it is likely a scam. Report the email to the U.S. Department of the Treasury by forwarding it to firstname.lastname@example.org or calling the Treasury.
As a small business owner, you need to make accurate tax payments. Patriot’s online payroll service files and remits payroll taxes for you. Try it for free today.
This article has been updated from it’s original publication date (6/13/20112).
This is not intended as legal advice; for more information, please click here.