Accounting Best Practices, Fifth Edition

13–20. Pay Federal Taxes On-Line

There are a number of taxes that a company must pay to the federal government, such as unemployment insurance, Medicare, Social Security, withheld income taxes, and corporate income taxes. Since this can involve a substantial amount of money, companies tend to wait until the last minute to deposit them, usually through the local bank. If there is no one available to go to the bank to transfer the funds to the government, or if the bank is closed for any reason, then the company will be penalized for late payments. This is a particular problem when only a few people know how to make the deposits and they are unavailable for any reason on the day when a payment is required.

These problems can be resolved by making on-line payments to the federal government through its free www.eftps.gov site. This involves creating an account with the government on-line through its “New Taxpayer Enrollment Form” and then waiting up to 15 days for the IRS to mail a PIN number to you. Once received, a company can then request an Internet password and submit tax payments at any time of the day or night, seven days a week. The government then transfers the designated funds out of the company bank account. A printable confirmation is made available, which a company can retain as proof of payment to the government. A transaction history is also available on-line for all payments made within the last 120 days. It is even possible to schedule payments up to 120 days prior ...