EFTPS | Nesteggg Accounting

IRS reminds employers about the benefits of EFTPS

The Internal Revenue Service today wants small business owners who are employers to know that the Electronic Federal Tax Payment System has features that can help them in meeting their tax obligations. EFTPS can help employers whether they prepare and submit payroll taxes themselves or if they hire a payroll service provider to do it on their behalf.

Many employers outsource to third-party payroll service providers some or all their payroll and related tax duties, such as tax withholding, reporting and making tax deposits. Third-party payroll service providers can help assure filing deadlines and deposit requirements are met and streamline business operations. Most payroll service providers administer payroll and employment taxes on behalf of an employer, where the employer provides the funds initially to the third party. They also report, collect and deposit employment taxes with state and federal authorities.

Treasury regulations require that employment tax deposits be made electronically and employers should ensure their third-party payer uses the Electronic Federal Tax Payment System (EFTPS).

EFTPS helps employers keep an eye on their tax responsibilities, even if they have hired a payroll service provider. EFTPS is secure, accurate, easy to use and provides an immediate confirmation for each transaction. Anyone can use EFTPS. The service is offered free of charge from the U.S. Department of Treasury and enables employers to make and verify federal tax payments electronically 24 hours a day, seven days a week through the internet or by phone.

Additionally, employers who use payroll service providers can verify that payments are made by using EFTPS online. The EFTPS webpage has information for employers who use payroll service providers. For more information, employers can enroll online at EFTPS.gov, or call EFTPS Customer Service at 800-555-4477 for an enrollment form.

The IRS recommends that employers do not change their address of record to that of the payroll service provider as it may limit the employer’s ability to be informed of tax matters.

Inquiry PIN
Third parties making tax payments on behalf of an employer will generally enroll their clients in the EFTPS under their account. This allows them to make deposits using the employer’s Employer Identification Number (EIN).

When third parties do this, it may generate an EFTPS Inquiry PIN for the employer. Once activated, this PIN allows employers to monitor and ensure the third party is making all required tax payments. Employers who have not been issued Inquiry PINs and who do not have their own EFTPS enrollment should register on the EFTPS system to get their own PIN and use this PIN to periodically verify payments. A red flag should go up the first time a service provider misses or makes a late payment.

Employers enrolled in EFTPS can make up any missed tax payments and keep making tax payments if they change payroll service providers in the future. They can also update their information to receive email notifications about their account’s activities. Access to this feature requires a PIN and password for the system.

Once they opt-in for email notifications, they’ll receive notifications about payments they submit including those made by their payroll service provider. Email notification messages show:

Payments scheduled
Payment cancellation
Return of payments
Reminders of scheduled payments

Employers who believe that a bill or notice received is a result of a problem with their payroll service provider should contact the IRS as soon as possible by calling or writing to the IRS office that sent the bill, calling 800-829-4933 or making an appointment to visit a local IRS office.

If an employer suspects their payroll service provider of improper or fraudulent activities involving the deposit of their federal taxes or the filing of their returns, they can file a complaint with the Return Preparer Office using Form 14157, Complaint: Tax Return Preparer. A check-box on Form 14157 allows the employer to select “Payroll Service Provider” as the subject of the complaint. Once received, Form 14157 complaints will receive expedited handling and investigation.

IRS now billing those who filed for 2018 but didn’t pay; many payment options available

WASHINGTON ― The Internal Revenue Service today advised those now receiving tax bills because they filed on time but didn’t pay in full that there are many easy options for paying what they owe.

Taxpayers can pay online, by phone or using their mobile device. Taxpayer who can’t pay in full may consider payment plans and compromise options; the IRS wants anyone facing a tax bill to know that they have many choices available to them.

If a tax return was filed but the amount owed are unpaid, the taxpayer will receive a letter or notice in the mail from the IRS, usually within a few weeks. These notices, including CP14 and CP501, which notify taxpayers that they have a balance due, are frequently mailed during June and July.

Recent major tax law changes affect most taxpayers, and while the vast majority are receiving refunds, others discovered that they owe tax this year. Many of them may qualify for a waiver of the estimated tax penalty that normally applies. See IRS Form 2210, Underpayment of Estimated Tax by Individuals, Estates and Trusts, and its instructions for details.

Taxpayers are reminded to pay as much as possible, as soon as possible to minimize interest and penalties.

Making a payment

Taxes can be paid anytime throughout the year. When paying, taxpayers should keep in mind:

Electronic payment options are the quickest way to make a tax payment.
IRS Direct Pay (bank account) is a free way to pay online directly from a checking or savings account.
Taxpayers can choose to pay with a debit or credit card. Although the payment processor will charge a processing fee, no fees go to the IRS.
The IRS2Go app provides mobile-friendly payment options. Taxpayers can use Direct Pay or card payments on mobile devices.
Taxpayers can pay using their tax software when they e-file. For those using a tax preparer, they can ask the preparer to make the tax payment electronically.
Taxpayers may also enroll in the Electronic Federal Tax Payment System and have a choice of using the internet or phone and using the EFTPS Voice Response System.

Those who can’t pay in full have several options. They can:

Set up a payment plan

With the Online Payment Agreement, taxpayers can usually set up a payment plan (including an installment agreement) in a matter of minutes. Individuals who owe $50,000 or less in combined income tax, penalties and interest likely qualify for an Online Payment Agreement.

Online applications to establish tax payment plans are available Monday – Friday, 6 a.m. to 12:30 a.m.; Saturday, 6 a.m. to 10 p.m.; Sunday, 6 p.m. to midnight. All times are Eastern time.

Another option is getting a loan. In many cases, loan costs may be lower than the combination of interest and penalties the IRS must charge under federal law.

Make paying easier

Automating payments makes it easy to avoid default. Using direct debit from a bank account or a payroll deduction means taxpayers don’t have to remember to send in a payment and saves postage costs. User fees may apply, except to low-income taxpayers, but are lower than fees for manual payment plans.

Pausing collection

If the IRS determines a taxpayer is unable to pay, it may delay collection until their financial condition improves.

Settle for less

The Offer in Compromise program allows some struggling taxpayers to settle their tax bill for less than the full amount due. User fees apply except to low-income taxpayers. This year’s Offer in Compromise guide and application can be found at www.irs.gov/OICbooklet. The online Offer in Compromise Pre-Qualifier tool can help taxpayers determine if they are eligible.

Check tax withholding

For many taxpayers, this year’s unexpected tax bill could have been avoided with a Paycheck Checkup. The IRS urges all taxpayers to check their withholding for 2019, including those who made withholding adjustments in 2018 or had a major life change. Those most at risk of having too little tax withheld from their pay include taxpayers who itemized in the past but now take the increased standard deduction as well as two-wage-earner households, employees with non-wage sources of income, and those with complex tax situations.

Taxpayers can figure out the appropriate withholding to their paychecks with the IRS’s Withholding Calculator on IRS.gov. It’s never too early to check withholding.

Online tools

The IRS urges everyone to take advantage of the many tools and other resources available on IRS.gov. The Let Us Help You page answers most tax questions, and Publication 5136, IRS Services Guide, links to these and other IRS services.

Taxpayers can go to IRS.gov/account to securely access information about their federal tax account. They can view the amount they owe, payment history and key information for the most current year tax return as originally filed. Visit IRS.gov/secureaccess to review the required identity authentication process.

It pays for employers to file payroll taxes electronically

Business owners who file payroll and employment taxes using paper forms should consider filing these electronically. Here are some of the forms employers can e-file: [Read more…]

Estimated taxes form and publication can help people pay the right amount in 2019

Estimated taxes form and publication can help people pay the right amount in 2019

WASHINGTON –The Internal Revenue Service today reminded self-employed individuals, retirees, investors and others who pay their taxes quarterly that the first estimated tax payment for tax year 2019 is due Monday, April 15, 2019, for most taxpayers. A 2018 tax return and 2019 Form 1040-ES, Estimated Tax for Individuals, can help these taxpayers estimate their first quarterly tax payment.

The Tax Cuts and Jobs Act changed the way tax is calculated for most taxpayers, including those with substantial income not subject to withholding. The law changed tax rates and brackets, revised business expense deductions, increased the standard deduction, removed personal exemptions, increased the child tax credit and limited or discontinued other deductions. As a result, many taxpayers may need to raise or lower the amount of tax they pay each quarter through estimated tax payments. The 2019 Form 1040-ES and instructions include inflation adjustments for the standard deduction, income tax rate schedules for tax year 2019 and a worksheet to help taxpayers figure estimated tax payments correctly.

A companion publication, Publication 505, Tax Withholding and Estimated Tax, has additional details, including worksheets and examples, which can help taxpayers determine whether they should change their withholding or make estimated income tax payments. This publication may be helpful for those who have dividend or capital gain income, owe alternative minimum tax or have other special situations.

Who needs to pay quarterly?

Most often, self-employed people, including some persons involved in the sharing economy, need to pay quarterly installments of estimated tax. Similarly, investors, retirees and others – a substantial portion of people whose income is not subject to withholding – often need to make these payments as well. Besides self-employment income, other income generally not subject to withholding includes interest, dividends, capital gains, alimony and rental income.

Because the U.S. federal income tax is a pay-as-you-go tax, taxpayers are required to pay the tax as they earn or receive income during the year. If a taxpayer didn’t pay enough tax during the year, either through withholding or by making estimated tax payments, the taxpayer may normally have to pay a penalty. Recent major tax law changes affect most taxpayers, and while the vast majority are on track to receive a refund, others are finding that they owe on their taxes. Many taxpayers who owe for 2018 may qualify for a waiver of the estimated tax penalty that normally applies.

For 2019, an estimated tax penalty will generally apply to anyone who pays too little tax, generally less than 90 percent of the tax reported on their 2019 income tax return, during the year through withholding, estimated tax payments or a combination of the two. In addition, individuals who base their payments of estimated tax on last year’s tax will not be subject to a penalty if they pay 100 percent of the tax reported on their prior year’s return (110 percent if their income was more than $150,000).

Exceptions to the penalty and special rules apply to some groups of taxpayers, such as farmers, fishermen, casualty and disaster victims, those who recently became disabled, recent retirees, and those who receive income unevenly during the year. See Form 2210 and its instructions for more information.

Employees have a choice

Many employees who also receive income from other sources may be able to forgo making estimated tax payments if they increase the amount of income tax withheld from their pay instead of making estimated tax payments. They can do this by claiming fewer withholding allowances on their Forms W-4, Employee’s Withholding Allowance Certificate, by completing the Deductions, Adjustments, and Additional Income Worksheet in the instructions to Form W-4. Taxpayers can also ask their employer to withhold an additional flat-dollar amount each pay period.

Do a Paycheck Checkup

Because of the far-reaching tax changes from the Tax Cuts and Jobs Act, the IRS urges all employees, including those with other sources of income, to perform a Paycheck Checkup every year. This means taking steps now to help avoid an unexpected tax bill and possibly a penalty next year when they file. Taxpayers can use the IRS Withholding Calculator available on IRS.gov to do a Paycheck Checkup. However, employees who expect to receive long-term capital gains or qualified dividends, or employees who owe self-employment tax, alternative minimum tax, or tax on unearned income of minors, should use the instructions in Publication 505 to check whether they should change their withholding or make estimated tax payments.

To use the IRS Withholding Calculator, taxpayers should have their 2018 tax return and their most recent paystubs available. The Withholding Calculator results will recommend the number of allowances the employee should claim on their Form W-4. If the Withholding Calculator suggests a change, the employee should fill out a new Form W-4 and give it to his or her employer.

Although the calculator is primarily designed for employees who receive wages, it can also be helpful to some recipients of pension and annuity income. Pension and annuity recipients can change their withholding by filling out Form W-4P and giving it to their payer.

How and when to pay

For tax year 2019, estimated tax payments are due from individual taxpayers on April 15, June 17, Sept. 16 and Jan. 15, 2020. Taxpayers who have not yet filed their income tax returns and are due a refund of their 2018 federal income tax may be able to reduce or even skip one or more of these payments by choosing to apply their 2018 tax overpayment to their 2019 estimated tax. See Form 1040 and its instructions for more information.

Taxpayers in presidentially declared disaster areas may have more time to make these payments without penalty. Visit the Tax Relief in Disaster Situations page for details.

The fastest and easiest way to make estimated tax payments is electronically using IRS Direct Pay or the Treasury Department’s Electronic Federal Tax Payment System (EFTPS). For information on other payment options, visit IRS.gov/payments. For those who choose to pay by check, it must be made payable to the United States Treasury.

Taxpayers can get more information about tax withholding and estimated tax on the IRS’s Pay As You Go web page, as well as in Publication 505, Tax Withholding and Estimated Tax.

Avoid the rush: Pay taxes owed online or set up a payment plan

Avoid the rush: Pay taxes owed online or set up a payment plan

WASHINGTON — The Internal Revenue Service today reminded taxpayers who may unexpectedly owe additional tax that there are many online options for payment as well as online options for applying for a payment plan for those who can not pay in full.

Questions about payments and installment plans are among the top reasons taxpayers call or visit the IRS. But they can avoid the rush, especially during the peak period of Presidents Day, by using IRS.gov resources.

All taxes owed must be paid in full by the due date, which is Monday, April 15, 2019, for most taxpayers. Because of the Patriots’ Day holiday on April 15 in Maine and Massachusetts and the Emancipation Day holiday on April 16 in the District of Columbia, taxpayers who live in Maine or Massachusetts have until April 17, 2019, to file their tax returns.

Payment options

Taxpayers should review the “Pay” tab on IRS.gov to see an explanation of payment options. Taxpayers can pay with their bank accounts for free, or choose an approved payment processor to pay by credit or debit card for a fee. They can also use checks or money orders made out to U.S. Treasury.

Most tax software products give taxpayers various payment options, including the option to withdraw the funds from a bank account. As an alternative, taxpayers also may use IRS Direct Pay on IRS.gov to make an electronic payment from their bank account to the U.S. Treasury.

Some taxpayers also visit an IRS office to make in-person monthly or quarterly tax payments. But there are online options available to them as well. Those payments can be made online by using IRS Direct Pay or through the Electronic Federal Tax Payment System.

Taxpayers who owe money with their tax return but who lack the full amount should pay as much as possible to avoid interest and late-payment penalties. Taxpayers who lack the funds to pay in full can apply for a payment plan, including an installment agreement.

Setting up a payment plan

Qualified taxpayers may be eligible for several types of online payment plans such as full payment, short-term (120 days or less) or long-term (more than 120 days). A taxpayer’s specific tax situation will determine which payment options are available to them.

Taxpayers may qualify to apply online for:

Long-term payment plan (installment agreement): If the taxpayer owes $50,000 or less in combined tax, penalties and interest, and filed all required tax returns.
Short-term payment plan: If the taxpayer owes less than $100,000 in combined tax, penalties and interest.

Taxpayers interested in exploring payment plan options should review Apply Online for a Payment Plan. Alternatively, taxpayers can find out if they qualify for an offer in compromise, a way to settle your tax debt for less than the full amount, or request that the IRS temporarily delay collection until the taxpayer’s financial situation improves.

Do a Paycheck Checkup

A Paycheck Checkup can help taxpayers see if they are withholding the right amount of tax from their paychecks. Taxpayers who unexpectedly had a tax bill may want to use this feature to ensure that additional taxes are withheld for the 2019 tax year.

The IRS Withholding Calculator helps taxpayers figure out if they should submit a new Form W-4 to their employer. Taxpayers will need their most recent pay stub and their most recent federal tax return to complete the process.

Here’s how and when to pay estimated taxes

Here’s how and when to pay estimated taxes

Certain taxpayers must make estimated tax payments throughout the year. Taxpayers must generally pay at least 90 percent of their taxes throughout the year through withholding, estimated tax payments or a combination of the two. If they don’t, they may owe an estimated tax penalty.

For tax-year 2018, the remaining estimated tax payment due dates are Sept. 17, 2018 and Jan. 15, 2019.

Estimated tax is the method used to pay tax on income that is not subject to withholding. This income includes earnings from self-employment, interest, dividends, rents, and alimony. Taxpayers who do not choose to have taxes withheld from other taxable income should also make estimated tax payments. This other income includes unemployment compensation and the taxable part of Social Security benefits.

The IRS urges everyone who works as an employee and who also earns or has income from other sources to perform a Paycheck Checkup now. Doing so will help avoid an unexpected year-end tax bill and possibly a penalty when the taxpayer files their 2018 tax return next year. They can do a checkup using the Withholding Calculator on IRS.gov.

Here are some things to know for taxpayers who make estimated payments:

Taxpayers can pay their taxes throughout the year anytime. They must select the tax year and tax type or form when paying electronically.
Filers paying by check should make it out to the “United States Treasury” and indicate the tax year and type of taxes they are paying.
Taxpayers in presidentially-declared disaster areas may have more time to make these payments without penalty.
For easy and secure ways to make estimated tax payments, use is IRS Direct Pay or the Electronic Federal Tax Payment System. IRS.gov/payments has information on all payment options.
Taxpayers can find more information about tax withholding and estimated tax at the Pay As You Go page IRS.gov.
Publication 505, Tax Withholding and Estimated Tax, is another resource for taxpayers. Publication 505 has worksheets and examples, which can help taxpayers determine whether they should pay estimated tax.

Monitoring outsourced payroll duties on EFTPS

Monitoring outsourced payroll duties on EFTPS

Many employers hire third-party payroll service providers to perform their payroll processing functions and tax-related duties, including making employment tax deposits.

The employer, generally, remains liable for any unpaid employment taxes, including any penalties and interest resulting from any underpayment, even if they use a third-party payroll service provider.

Note, this may not apply to employers using Certified Professional Employer Organizations (CPEO).

To ensure an employer’s third-party payroll service provider makes accurate and timely federal tax deposits, employers should monitor deposits made on their behalf for accuracy and timeliness.

Using an EFTPS Inquiry PIN to monitor tax deposits

Third-party payroll service providers who make tax deposits and payments on behalf of their client, normally, enroll them in the Electronic Federal Tax Payment System via the payroll provider’s EFTPS account by using the client’s EIN. This allows the third-party payroll service provider to make deposits using the client employer’s EIN.

When third-party payroll service providers enroll client employers in EFTPS, an EFTPS Inquiry PIN may be sent to the employer. Client employers who have deposits made on their EFTPS account during the prior 12 months may also receive Inquiry PINs. An Inquiry PIN allows the employer to verify their third-party provider is making timely and accurate federal tax deposits.

The benefits of creating a separate EFTPS account

While many employers use an Inquiry PIN to monitor deposits made on their behalf, others may want to separately enroll and create their own EFTPS account. Creating an EFTPS account allows the employer to not only monitor tax deposits but also:

Set up reminders,
• Make tax deposits and payments on their own,
• Make up any missed tax deposits and payments and
• Keep making tax deposits and payments if they change payroll service providers.

Setting up EFTPS notifications

Whether an employer chooses to use an Inquiry PIN, or to create their own EFTPS account, the employer can also sign up and enroll to receive email notifications about their account’s activities. Access to this feature requires a PIN and password.

Once an employer opts in for email notifications, the employer will receive notifications about their deposits and payments submitted, including those made by their payroll service provider.

Email notification messages show:

Payments scheduled,
• Payment cancellation,
• Returned payments and
• Reminders of scheduled payments.

Email notifications only allow one email address per taxpayer. If the email address changes, a message regarding the change is sent to both the old and new addresses.

Employers can cancel email notifications at any time.

Find more information by watching Monitoring your outsourced payroll duties on EFTPS and by visiting www.EFTPS.gov.

Paying and Filing your “Federal Payroll Taxes”

During each tax quarter we try to update our clients and followers with information mandated by the IRS to provide you with the following information regarding . While it is not necessary for you to enroll in the IRS tax payment and filing system (EFTPS), the following statement below from the IRS recommends that you do so:

Please be aware that you are responsible for the timely filing of employment tax returns and the timely payment of employment taxes for your employees, even if you have authorized a service provider to file the returns and make the payments.

Therefore, the Internal Revenue Service recommends that you enroll in the U.S. Treasury Department’s Electronic Federal Tax Payment System (EFTPS) to monitor your account and ensure that timely tax payments are being made for you.

You may enroll in the EFTPS online at www.eftps.gov, or call (800) 555- 4477 for an enrollment form. State tax authorities generally offer similar means to verify tax payments. Contact the appropriate state offices directly for details.