IRS Offers Penalty Refund for EFTPS Enrollment


John H. Fisher

IRS Offers Penalty Refund for EFTPS Enrollment

IR-2004-70, May 24, 2004

WASHINGTON -- The Internal Revenue Service today announced an incentive to
encourage enrollment in and use of the Electronic Federal Tax Payment
System (EFTPS). Approximately 1 million employers could qualify for a
refund of a previously paid federal tax deposit (FTD) penalty.

The EFTPS-FTD penalty refund offer allows business taxpayers an
opportunity to receive an automatic one-time penalty refund if they have
been assessed a deposit penalty on a Form 941, Employer's Quarterly
Federal Tax Return. The offer is available to employers who are not
mandated to use EFTPS. To qualify for the offer, the employer must:

- use EFTPS for one year (four consecutive quarters),
- make all Form 941 payments on time and,
- have previously fully paid the penalty.

"This approach is a sound business decision for both taxpayers and the
government," said IRS Commissioner Mark W. Everson. "Using the electronic
payment system is much more accurate and much less burdensome for
taxpayers. At the same time, the government saves money because there are
fewer errors, fewer notices and fewer problems."

Using EFTPS eliminates the vast majority of the errors found on paper
submissions. These errors on paper coupons result in late or misapplied
payments and an FTD penalty.

"Paying taxes using EFTPS means almost 20 times greater accuracy," said
Dick Gregg, FMS Commissioner. "Greater accuracy means fewer penalties. I
encourage individuals and businesses to enroll today and save time and
money." Beginning in 2005, the IRS will automatically determine which
employers have achieved the four quarters of EFTPS compliance and reverse
the most recent full-paid FTD penalty minus any outstanding taxes. No
other action by the employer is necessary.

The IRS will look back up to four quarters prior to the four-quarter
compliance period for a full paid FTD penalty to abate. Penalties paid
earlier than one year prior to the four-quarter compliance period are not
eligible for the automatic offer.

EFTPS is a free service provided by two bureaus of the U.S. Department of
the Treasury, IRS and the Financial Management Service (FMS). EFTPS gives
businesses, individuals, and tax professionals the ability to make federal
tax payments electronically online, by phone or with batch provider
software for professionals.

Taxpayers can enroll in EFTPS by visiting or by calling EFTPS
Customer Service at 1-800-555-4477 to receive an enrollment form by mail.

EFTPS was introduced in 1996 and since that time more than 4.6 million
taxpayers have enrolled in the system to make their federal tax payments
electronically. In fiscal year 2003, EFTPS processed more than 68.5
million transactions totaling more than $1.5 trillion. Taxpayers can make
payments through a secure web site or by phone 24 hours a day, seven days
a week from home or office; schedule payments up to 120 days in advance
(for businesses) and 365 days in advance (for individuals); and review the
last 16 months of tax payment history online or by calling Customer
Service. In addition, taxpayers receive an immediate acknowledgement
number for every EFTPS transaction for easy record keeping and as proof of
the transaction. EFTPS is ideal for all business taxpayers and for
individual taxpayers that make Form 1040 ES quarterly estimated payments.

Web Links:

- Electronic Federal Tax Payment System --
- Financial Management Service --

"Jack" - John H. Fisher - (e-mail address removed)
Philadelphia, Pa - Atlantic City, NJ - West Wildwood, NJ
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