The treasury department has issued a ruling that beginning in 2011 most businesses will be required to use the EFTPS federal wire transfer system for payment of their employment taxes. There is a small exemption for those who pay in less than 2,500 per quarter.
So if you are still taking your federal tax deposit to the bank with form 8109, you should go ahead and get the EFTPS set up for your business so that you can hit the ground running in 2011. It is free and saves you a trip to the bank. However, it is a sign of the times when the federal government won't accept legal tender that it creates, that the rest of the business world uses daily without complaint, for payment of its own taxes.
By the way, the penalty for paying with a check rather than using the electronic transfer system is steep. Failure to use EFTPS when required results in a "failure-to-deposit" penalty of up to 15% of the amount required to be electronically deposited, even if the taxes are timely paid by paper. I would hope they would show grace during the transition.
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IRS CIRCULAR 230 DISCLOSURE REQUIREMENT: IRS Circular 230 requires us to notify you that any tax advice contained in this communication is not intended or written to be used, and cannot be used, by any person for the purpose of avoiding tax penalties that may be imposed by law.
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