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Many companies must file tax returns electronically by 1997.

Taxpayers paying more than $50,000 in employment taxes must make their 1997 federal tax deposits electronically. In May, the Internal Revenue Service began notifying companies that paid employment depository taxes of more than $50,000 in 1995 that they must enroll in the electronic federal tax payment system (EFTPS) by November 1, 1996. Companies that do not enroll or do not make electronic payments will be assessed tax-avoidance, noncompliance and failure-to-pay penalties. For example, a company that deposits taxes using a check and form 8109 will be penalized 10% of its taxes.

The North American Free Trade Agreement of 1993 authorized the secretary of the treasury to mandate the electronic payment method for business taxes. The IRS supports the electronic funds transfer system because it makes payments more timely and efficient. A business that uses a third-party payroll processor or a financial institution as a reporting agent must still enroll in the EFTPS. All other taxpayers can voluntarily enroll and pay electronically.

For more information, contact the EFTPS customer service center at (800) 945-8400 or (800) 55%4477.

Electronic Payment

Companies with more than $50,000 in employment taxes must use an electronic payment system when filing the following forms:

Form 940, form 94l, form 943,

form 720, form 945, Form 990-C,

form 990-PF, form 990-T, form 1042,

form 1120, form CT-1
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Publication:Journal of Accountancy
Article Type:Brief Article
Date:Jul 1, 1996
Words:223
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