The IRS is changing the rules in a BIG way, when it comes to payroll and corporation tax deposits. Are you going to be ready for this new change? If not, you don’t have long to get ready! The new change goes into effect on January 1, 2011.
I got a letter from the IRS today that really surprised me. It said that starting on January 1st, I was no longer able to make manual payroll tax deposits at my bank … or anywhere else for that matter. The IRS has discontinued this service.
So what does that mean for your business? It means that in just over 3 weeks time you will be FORCED to make your payroll tax or corporate tax deposits online, through the EFPTS system (Electronic Federal Tax Payment System). This system has been in place since 1996, but hasn’t been widely used by many business owners. That’s about to change.
I did register my business with EFPTS earlier this year. In my experience, getting registered took about 7-14 days. Then, you’ve got to figure out how to use the system and make your payment.
Fortunately, QuickBooks will allow you to make these payments electronically, and there are a lot of other online service providers doing the same thing. You can even make payments directly to the IRS, through the EFPTS website. Will it cost you money? Not necessarily. Payments through the IRS’s website are free, and if you pay through QuickBooks, the payments will be covered by your existing subscription.
Now, I literally received a new package of Form 8109s just last week, for one of my C Corporations. I won’t be able to use a single one of them. And I know many small business owners who still send someone to a local bank with their payroll tax deposit once a month. With such a big change, you think that the IRS would have made more noise, or at least sent me a note with the Form 8109s, telling me I only had 3 weeks left to use them.
You don’t have long to get registered, and with the holiday season upon us, it’s not something you can let sit. Go to www.efpts.gov to learn more and start the registration process! If you had an EFPTS number once upon a time but haven’t ever used the system, now is the time to get yourself updated, and get familiar with the new system.
Non-participation isn’t really an option. The IRS also said in their letter that you can be charged a 10% penalty for each non-electronic deposit you make. Depending on the size of your payroll, that could be a hefty price to pay!
Just one more thing, for your year-end list of “to-do” items …