Financial Update (October-December 1996)

Electronic Federal Tax Payment
System: An Update

The inauguration of EFTPS is under way. The Atlanta Fed provides taxpayers and financial institutions with some guidelines and information.

he Electronic Federal Tax Payment System (EFTPS) is currently being implemented by the Treasury. Designated financial agents will begin processing electronic tax payments to the Internal Revenue Service (IRS) submitted through the Automated Clearinghouse (ACH). The Treasury mandate for corporate submission of federal taxes began Jan. 1, 1995, and will continue through Jan. 1, 1999. Most depository institutions will be affected by both corporate reporting requirements and by the need to provide electronic reporting services to customers.

EFTPS is operated by two Treasury Financial Agents (TFAs), First National Bank of Chicago and NationsBank. When taxpayers enroll in EFTPS, they are generally assigned to a TFA based on the geographical location. For most taxpayers in the Sixth Federal Reserve District, NationsBank will be the TFA. For further information contact First National Bank of Chicago at 1-800-945-8400 (taxpayers) and 1-800-945-9700 (financial institutions) or NationsBank at 1-800-555-4477 (taxpayers) and 1-800-605-9876 (financial institutions).

The majority of taxpayers filing electronically will use ACH credit or ACH debit to report taxes.

  • ACH credit: taxpayers use their depository institutions if those institutions are ACH credit originators and if they will process federal tax payments. Questions regarding the ACH credit format can be directed to the Atlanta Fed ACH Central office at 1-800-851-7025.
  • ACH debit: taxpayers report their tax information directly to the TFA.
The Electronic Tax Application (ETA) same-day mechanisms are also available to customers who need a same-day reporting application because they cannot report tax liability at least one day in advance of the tax payment due date, as required by ACH. Questions regarding ETA can be directed to the Atlanta Fed Treasury Tax and Loan unit at 1-800-650-8825.

The IRS has recently amended its EFTPS provision and will provide relief to the 1.2 million taxpayers mandated to begin depositing federal taxes electronically by Jan. 1, 1997. The IRS will not impose penalties on these new depositors for failure to make deposits electronically through EFTPS until after July 1, 1997.

EFTPS information is located on the Federal Reserve Bank of Minneapolis site on the World-Wide Web.

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