Paying Payroll Taxes

One of the few things that strike fear in my heart is the thought of missing a federal or state tax payment. I can just see the dollars draining from my bank account as I pay the penalties and interest. That is why I love the EFTPS system so much. However, there are things you must be aware of if you use that system.

First, you probably know that if your business’ total aggregate tax deposits exceed $200,000 during a tax year you must use EFTPS. But did you know that you could be penalized 10% if you make a tax deposit at a bank using an 8109B coupon instead of using EFTPS? Say you forget to set up the payment by 8 P.M. the day before the payment is due. No sweat, you think. I’ll just run to the bank tomorrow before 2:00. Everything will be fine. Wrong! Even if you are late with the payment, it might be cheaper to pay it through EFTPS.

Second, if you use a payroll service that makes the payments for you, you are still liable for any taxes not paid and penalties for late payments if the payroll service goes bankrupt, as a recent court case held for the IRS. You might think that just because the money is taken out of your checking account it is being paid to the IRS. One of the benefits of EFTPS is that you can check their records to be sure that all of your taxes are being paid on time. You can set up your own access to the payments made to your account, as noted in the brochure published by the EFTPS. Go to this address to see the brochure: https://download.eftps.com/966_brochure.pdf.

Be proactive to protect yourself, and possibly save your business!