IRS Relaxes Electronic Filing Rule

In response to complaints from the small-business community, the Internal Revenue Service has backed down from a requirement forcing many small firms to pay their federal taxes electronically.

Beginning July 1, 1999, all companies with more than $20,000 in annual payroll taxes were supposed to begin paying through the Electronic Federal Tax Payment System or face a 10% penalty for using the old paper coupon system--even if they file on time. However, new regulations have raised that threshold to $200,000 in aggregate annual federal taxes and pushed back the deadline for compliance to Jan. 1, 2000.

Although 91% of the nation’s businesses will be exempt from the EFTPS filing requirements, the IRS says that more than 4,000 a week are signing up for the paperless service. The agency processed about 47 million transactions through EFTPS in 1998 worth about $1.2 trillion, according to IRS spokesman Keith Kimball. For those worried about the millennium computer bug, Kimball adds that EFTPS is Y2K compliant.

Small businesses interested in learning more about EFTPS should check out the Small Business Corner on the IRS Web site at https://www.irs.ustreas.gov or call the agency’s customer service hotline at (800) 555-4477 or (800) 945-8400.