Electronic Federal Tax Payment System (EFTPS)

What Is the Electronic Federal Tax Payment System?

The Electronic Federal Tax Payment System (EFTPS) is an online tool that allows anyone—including business entities and the public—to pay their tax bill at no cost to them. The system also provides the opportunity to pay through voice response. The EFTPS system is provided by the US Department of Treasury free of charge and is available for processing payments 24/7/365.

The system is designed to be convenient, allowing users to schedule their tax payments up to a year in advance and change or cancel those payments whenever needed. Additionally, anyone using the system can track payments, receive email notifications for recordkeeping purposes, and easily view up to 15 months of verified payment history.

The EFTPS system should not be confused with DirectPay, which is a direct-to-IRS system that individuals can use to pay their tax bills. Unlike EFTPS, DirectPay does not accept payments from business owners who file a tax return separate from personal tax returns, and it caps each payment at $10 million.

Who Can Use the EFTPS?

As mentioned, the electronic federal tax payment system is a public tool that everyone can use. Here is a list of people and entities that commonly use this convenient system to get their tax bills paid on time.

Businesses

Using the EFTPS system allows businesses to pay tax bills conveniently. Because it’s quick to use, it can relieve some of the administrative burden for HR professionals. Additionally, since it’s managed by the US government, it can give you the assurance and confidence of data security.

Payroll Companies

These companies often handle the payroll process from start to finish, including the responsibility of filing payroll taxes. The EFTPS system helps payroll companies do this conveniently and avoid penalties and compliance risks with timely payment.

Financial Institutions and Tax Professionals

The EFTPS system allows customers to set up their own accounts to make payments. Alternatively, the platform allows financial institutions and tax professionals to initiate payments on behalf of business customers with an ACH credit option. Payments are usually transmitted through third-party software.

Federal Agencies

Though these entities don’t pay income taxes, federal government agencies are required to withhold payroll, Social Security, and Medicare taxes from employee paychecks just like any private business. For this reason, the EFTPS system is open to government HR administrators to make their tax payments when due.

Individuals

Whether they’re self-employed or earning a salary or wages from a traditional job, individuals can use EFTPS to enjoy the same convenience as businesses do when paying their tax bills online. Individuals are offered the same level of security and service given to businesses and HR professionals.

What Kinds of Payments Can Be Made Through EFTPS?

One of the reasons the Internal Revenue Service Electronic Federal Tax Payment System is so convenient is that it can take many different kinds of corporate tax payments, including estimated, yearly, payroll, and excise taxes.

Estimated Taxes

Estimated tax payments are those due to the federal government quarterly for individuals and entities with regular earnings that are not subject to federal tax withholding. The IRS has already set the payment dates, with payments due in January, April, June, and September.

The EFTPS provides a high level of convenience for those who are required to pay taxes this way. The system allows for scheduling payments in advance to ensure they’re received on time and to access payment history in case it’s needed for a compliance audit.

Corporate Taxes

Not filing and paying yearly corporate taxes on time introduces corporations to compliance issues and the threat of possible fines and penalties. These entities are typically not allowed to file their taxes by mail, as this process would be both risky and inefficient.

Corporations are actually required to use the EFTPS system. Fortunately, like quarterly estimated taxes, the EFTPS system makes it easy and convenient for corporations to pay their yearly tax bills.

Self-Employment Taxes

Self-employed individuals are generally required to file and pay both quarterly and annual tax returns. They’re responsible for self-employment taxes (Social Security and Medicare) and income taxes.

While self-employment taxes can be paid by mail, the Electronic Federal Payment Tax System is much more expedient. Even if these individuals schedule payments in advance through the EFTPS system, they can still easily adjust their payments should their income increase or drop over the course of the year.

Payroll Taxes

Payroll taxes are due even more frequently than estimated taxes. HR professionals must ensure that these payments are made on a monthly or semi-weekly schedule, depending on what option is selected at the beginning of the calendar year.

Because payments can be scheduled in advance and tracked as the year goes on, EFTPS makes compliance a breeze. The convenience of online payments alleviates much of the administrative burden for HR professionals who don’t or cannot outsource payroll runs.

Excise Taxes

Excise taxes are those imposed on certain goods, services, and business activities. These are typically levied on businesses that handle imports, as well as manufacturers and retailers. In some cases, consumers must also pay excise taxes.

These taxes are often due on a semi-monthly basis. This makes using the EFTPS system much more practical than paying these taxes by mail.

How Employers Can Enroll in the EFTPS

Employers must take a few steps to enroll in the Electronic Federal Tax Payment System:

1. Call the EFTPS customer service hotline for businesses at 1-800-555-4477.
2. Request an enrollment form and instructions for filling out the form.
3. Complete and mail the form to the address provided on the form.
4. Wait to receive a confirmation package and personal identification number (PIN).

The IRS indicates that businesses will receive all of the information needed to use EFTPS within seven business days after forms are received and processed.

If mail is not your preferred method of enrollment, you can also enroll online at EFTPS.gov. The system is available to accept enrollments 24/7. Whether enrolling by mail or online, you’ll need to provide the following information:

• Employer identification number (EIN)
• Business name and mailing address exactly as it appears on your tax returns
• Primary contact who will receive EFTPS paperwork and answer questions
• Primary contact mailing address and phone number
• Payment method

Note that separate enrollments are required for those using multiple accounts at one financial institution or accounts at multiple financial institutions. Once enrollment is complete, you will have everything you need to begin making payments, which will be processed immediately.

A Note of Caution About EFTPS Scams

Although the EFTPS system is highly accurate, convenient, and secure, there are a few issues associated with using the system. Because so much sensitive information is submitted electronically, many businesses and individuals have fallen victim to EFTPS-related phishing scams.

These scams typically target HR professionals via email. Though they appear to be from a legitimate source (such as the IRS, Department of Treasury, or a payroll or tax service you may be using), they’re actually coming from a bad actor. The point of the scam is to get you to provide sensitive information in hopes that the scammer can use it to access business accounts and steal funds.

For example, a phishing email appearing to be from the IRS may ask you to take action on paying a tax bill and send you an electronic form to “help” you do so. However, the form may be fraudulent and designed to collect sensitive information from you. In other cases, a link may install malware that takes over your machine or covertly intercepts the transmission of important information.

The IRS and Department of Treasury make it clear that because EFTPS is a payment system, it will not initiate contact with taxpayers or ask for sensitive information. If you receive an email of this nature, it’s best to report it to [email protected] for further investigation.