X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.

WASHINGTON – Nearly six months after the U.S. Department of the Treasury launched a campaign to encourage small businesses to file their federal taxes electronically, the agency is calling on credit unions to assist with the effort. The Simplify campaign was rolled out last November to promote the benefits of paying taxes electronically through the Electronic Federal Tax Payment System. According to Treasury, EFTPS enables tax preparers, businesses and individuals to pay federal taxes electronically, including corporate, excise and employment taxes, and 1040 quarterly estimated tax payments. The way EFTPS works is at least one day before the tax due date (before 8 p.m. ET), the user initiates a payment using EFTPS online or telephone voice response system. On the designated tax settlement date, funds are directly moved electronically through the ACH system from the respective taxpayer’s financial institution account to the Treasury’s General Account at the Federal Reserve Bank. On the morning of the transaction, EFTPS provides the payment information to the Treasury and to the IRS in order to update the taxpayer’s records. The IRS does not have access to a user’s personal account but does receive a confirmation that payment has been made. So far, Treasury officials have contacted NAFCU and CUNA to help out because many small business owners that have relationships with credit unions are a prime target for EFTPS, said Gary Grippo, assistant commissioner for federal finance at Financial Management Service, Department of the Treasury. NAFCU said it will assist the agency with promoting the Simplify program. The agency is trying to wean small businesses off the Federal Tax Deposit system, which uses paper coupons to pay federal taxes. Financial institutions including credit unions, process approximately 40 million tax payments annually for small- to medium-businesses using FTD coupons and paper checks, Treasury found. Those businesses tend to be ones that pay $200,000 or less in tax liability, Grippo said. They have the option of using FTD coupons or EFTPS. Businesses paying more than $200,000 are required to use EFTPS. “Credit unions in particular, as opposed to banks, may benefit from EFTPS because they are more likely to support the kinds of business that use coupons,” Grippo said. EFTPS was actually introduced in 1996 and has since processed more than 532 million transactions and $12.7 trillion in payments, according to Treasury. In fiscal year 2005, the number of EFTPS payments processed rose 7% to 78 million, and the dollar volume increased 11% to $1.8 trillion compared with the previous year. On Sept. 15, 2005, EFTPS received $68.78 billion in payments, the highest amount in its nine-year history, the agency said. More than six million users are enrolled. Since the Simplify campaign launched, Treasury has eliminated roughly half a million FTD coupons. Overall, the agency is looking to reduce the 40 million coupon payments by 9% each year, Grippo said. Through FTD, credit unions and other financial institutions can eliminate overhead costs including not having to pledge securities to the federal government if they process $100,000 or more in coupons, Grippo said. “The credit union doesn’t lose anything. The payment comes directly out of the (member’s) account,” he explained. “Based on market research, we’ve found that financial habits are hard to change. The main reason (small businesses) still use coupons is the inertia of long-standing practices. We’re hoping credit unions can help promote making the effort to change.” -

Credit Union Times

Join Credit Union Times

Don’t miss crucial strategic and tactical information necessary to run your institution and better serve your members. Join Credit Union Times now!

  • Free unlimited access to Credit Union Times' trusted and independent team of experts for extensive industry news, conference coverage, people features, statistical analysis, and regulation and technology updates.
  • Exclusive discounts on ALM and Credit Union Times events.
  • Access to other award-winning ALM websites including TreasuryandRisk.com and Law.com.

Already have an account? Sign In Now
Join Credit Union Times

Copyright © 2019 ALM Media Properties, LLC. All Rights Reserved.