Relief to Businesses
Required to Deposit Electronically

WASHINGTON - Commissioner of Internal Revenue Margaret Milner Richardson today provided relief to 1.2 million businesses required by law to begin depositing their federal taxes electronically by January 1, 1997.

According to Richardson, the IRS will not impose any penalty on these new depositors for failure to begin making deposits electronically through the Electronic Federal Tax Payment System (EFTPS) until after July 1, 1997.

"We are very sensitive to the concerns raised by a number of taxpayers about their ability to meet the January 1st date," said Richardson. "By postponing the penalty, businesses will have additional time to continue making federal tax deposits with traditional paper coupons while they learn more about EFTPS and set up procedures to use the new system."

EFTPS is a nationwide federal tax payment system that links financial institutions, taxpayers and the IRS. Businesses can pay their taxes by transferring money electronically from their bank accounts directly to the U.S. Treasury. Once enrolled in EFTPS, an employer may initiate electronic payments with as little as a telephone call or by using a computer. Employers will no longer have to worry about bringing their checks and paper deposit coupons to designated banks to pay their taxes.

Under the law, businesses that had more than $50,000 of federal employment tax deposits in 1995 must begin paying their taxes electronically by Jan. 1, 1997. The IRS recently sent letters and forms needed to enroll in EFTPS to the 1.2 million businesses that must begin making electronic payments in January 1997. The IRS will continue to work with these taxpayers to explain the EFTPS procedures.

Because EFTPS benefits both taxpayers and the federal government, the IRS encourages all businesses to enroll in EFTPS and begin making their payments electronically as soon as possible, even if they are not required to do so.

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