IRS to eliminate paper coupon deposits

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The Internal Revenue Service (IRS) has issued proposed regulations to significantly increase the number of electronic transactions between taxpayers and the federal government.

The proposed regulations (REG 153340-09) would eliminate the rules for making federal tax deposits by paper coupon because the paper coupon system will no longer be maintained by the Treasury Department after Dec. 31, 2010. The proposed regulations generally maintain existing rules for depositing federal taxes through the Electronic Federal Tax Payment System (EFTPS).

The following types of taxes are affected:

1. Corporate income and corporate estimated taxes pursuant to § 1.6302-1
2. Unrelated business income taxes of tax-exempt organizations under section 511 pursuant to § 1.6302-1
3. Private foundation excise taxes under section 4940 pursuant to § 1.6302-1
4. Taxes withheld on nonresident aliens and foreign corporations pursuant to § 1.6302-2
5. Estimated taxes on certain trusts pursuant to § 1.6302-3
6. FICA taxes and withheld income taxes pursuant to § 31.6302-1
7. Railroad retirement taxes pursuant to § 31.6302-2
8. Nonpayroll taxes, including backup withholding pursuant to § 31.6302-4
9. Federal Unemployment Tax Act (FUTA) taxes pursuant to § 31.6302(c)-3
10. Excise taxes reported on Form 720, Quarterly Federal Excise Tax Return, pursuant to § 40.6302(c)-1

The proposed regulations do not alter existing de minimus rules for employers with a deposit liability of less than $2,500 for a return period who are allowed to pay their employment taxes with their quarterly or annual tax return.

Using EFTPS to make federal tax deposits enables depositors to make tax payments 24 hours a day, seven days a week from any locatoin. The EFTPS system allows taxpayers to schedule payment dates up to 120 days advance of the desired payment date.

Information on EFTPS, including how to enroll, can be found at or by calling EFTPS Customer Service at 1-800-555-4477.

Comments will be accepted on the proposed regulations through Septemer 22, 2010. Comments can be submitted electronically. A public hearing on the proposed regulations will be held at the IRS building in Washington, D.C. on September 21, 2010.

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