Electronic Federal Tax Deposits Mandatory In 2011
All businesses, including those already making electronic deposits, will receive letter from IRS soon.


Tax deposit coupons (Form 8109-B) used by employers to pay their federal taxes, such as income tax, FICA and FUTA, no longer will be accepted as of January 1, 2011. A new regulation will force most employers to pay their federal taxes through the U.S. Department of Treasury’s Electronic Federal Tax Payment System (EFTPS), which includes online and pay-by-phone options. Failure to pay electronically on or after January 1 could result in a 10% penalty for each non-electronic deposit.

In preparation for the change, the IRS already has pre-enrolled businesses into the system. All businesses, including those already using the electronic system, will soon receive a letter from the IRS containing a personal identification number (PIN) and instructions on how to activate enrollment.

What To Do

• If your business currently makes its federal tax deposits via coupon, you will need to activate your account in EFTPS upon receiving your PIN from the IRS.
• If Cohen & Company deposits your businesses’ federal taxes, be sure to activate your account and then forward your PIN to a member of your service team.
• If you currently make deposits via EFTPS, there is no action to take. Continue to schedule payments as usual.

Exceptions
According to the IRS, small businesses - "typically, those with a federal tax liability of less than $2,500 per quarter" - will still be able to mail a check with their quarterly or annual returns. Visit www.irs.gov and search on "tax topics 757" for more information on exceptions to electronic payments.

To discuss the impact of the EFTPS on your business or to discuss other related tax issues, please contact me or any other member of your service team.