The Internal Revenue Service reminds small business owners who are employers to be aware of the Electronic Federal Tax Payment System and its many features and perks to help them in meeting their tax obligations. EFTPS can help employers regardless if they prepare and submit payroll taxes on their own or if they opt for a payroll service provider to do the job.
Many employers choose to outsource their needs to third-party payroll service providers a portion or all their payroll and related tax duties, such as tax withholding, reporting and making tax deposits. Third-party payroll service providers can make sure filing deadlines and deposit requirements are met and smooth business operations. Most payroll service providers prepare 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, according to an IRS news release.
Treasury regulations and stipulations require employment tax deposits are made electronically and employers should make sure their third-party payer utilizes the Electronic Federal Tax Payment System.
EFTPS also helps employers keep abreast of their tax responsibilities, even if they have opted for a payroll service provider. EFTPS is considered secure, accurate, easy to use and provides instant confirmation for each transaction. Anyone can use EFTPS and the service is free of charge from the U.S. Department of Treasury. It lets employers make and verify federal tax payments electronically 24 hours a day, seven days a week via the Internet or by phone, the release added.
Another benefit, employers who use payroll service providers can verify payments are completed by using EFTPS online. The EFTPS webpage has information for employers who use payroll service providers. For more information, employers may enroll online at EFTPS.gov, or call EFTPS Customer Service at 800-555-4477 for an enrollment form.
The IRS also recommends employers do not change their address of record to that of the payroll service provider as it could limit the employer’s ability to be informed of tax matters.
Third parties making tax payments on behalf of an employer will typically enroll their clients in the EFTPS under their account. This lets them 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 lets employers monitor and make sure the third party is making all required tax payments. Employers who have not been issued Inquiry PINs and who do not have their EFTPS enrollment should register on the EFTPS system to get their PIN and use this PIN to occasionally verify payments. A warning flag should go up the first time a service provider misses or makes a late payment, according to the IRS release.
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 submitted 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 feel a bill or notice received is due to a problem with their payroll service provider should contact the IRS ASAP 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 Prepare (PDF). 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.
For more information about IRS notices, bills, and payment options, refer to Publication 594, The IRS Collection Process (PDF).