December 7, 2010: Electronic Deposit Requirements for Qualified Intermediaries (QIs)
U.S. & Global FATCA Community:
In November 2010, the Treasury issued proposed regulations that eliminated Federal tax deposit (FTD) coupons and instead required that beginning January 1, 2011 almost all business taxpayers use electronic funds transfer (EFT) when making Federal Tax Deposits. The Electronic Federal Tax Payment System (EFTPS) is the EFT system currently used by the Treasury Department to collect FTDs. The proposed regulations generally maintain the existing rules for depositing federal taxes through the EFTPS system. They do not change existing rules for determining a depositor's status as either a monthly or semi-weekly depositor. They also do not change existing rules on whether a taxpayer can remit taxes with a return in lieu of making an FTD.
On December 7, the IRS issued an important message about these rules on the Qualified Intermediary News section of the IRS website. In that message, the IRS indicated that new electronic deposit requirements will apply to withholding qualified intermediaries (QIs) that deposit $2,500 or more per quarter. The IRS began mailing Notice CP-247 to QIs about the electronic deposit requirements on December 2, 2010. Notice CP-247 informs taxpayers of the following:
- QIs can no longer make required deposits using paper Forms 8109/8109-B.
- QIs will have to make their Federal Tax Deposits electronically beginning January 1, 2011.
- QIs may be charged a 10% penalty for each non-electronic deposit.
- QIs need to check with their financial institution to find out its cut-off date for accepting Federal Tax Deposit coupons.
- QIs should use the Electronic Federal Tax Payment System (EFTPS) for a convenient and quick way to make timely electronic deposits.
- QIs DO NOT need to take any action if they are currently making deposits using EFTPS.
QIs should review quarterly deposits and if deposits exceed the $2,500.00 level and are not already using EFTPS, QIs should begin to utilize the process. There are two options available to complete the enrollment: using the internet, or filing a paper application.
If enrolling using the internet, the website address is www.eftps.gov/eftps/enrollment. Follow the prompts to complete the online registration process.
To complete the application process using paper, please note that submitting a paper copy of your Form 9779, EFTPS Business Enrollment Form, to the IRS EFTPS Enrollment Processing Center may take up to ten weeks to process.