EFTPS: What Is Electronic Federal Tax Payment System

KEY TAKEAWAYS

• The EFTPS is a secure online payment system.
• Enrollment is necessary if you want to make certain tax payments through the EFTPS.
• EFTPS offers more control and security than the Direct Pay system.
• Enrollment can take up to 1 week to complete.

What is EFTPS?

The EFTPS was developed during the mid-1990s to decrease federal costs associated with tax collection. Since its rollout, the automated system helped streamline how businesses and the public pay their taxes. Once enrolled, you use a 3-step safeguard system to log in to your online account. 

You can make income, employment, estimated, and excise federal tax payments online or by phone, year-round, any time of day or night. You can also schedule, cancel, and change payment arrangements, track payments through email notifications, and view up to 15 months of transaction history. The system provides real-time acknowledgment of payments.

Which Payments Can Be Made Via EFTPS?

Users of EFTPS can only make payments once they are enrolled. The enrollment process can take up to 1 week. To ensure payments are on time, register before the payment due date. 

Once you are enrolled, you can use the system to pay all your federal taxes, including:

• Income tax
• Corporate tax
• Employment tax
• Excise federal tax
• Estimated tax

There is no limit to the size of an EFTPS payment.

EFTPS vs Direct Pay

EFTPS isn’t the only payment tool accepted by the Department of Treasury. IRS Direct Pay is another service for tax remittance. The 2 services have significant differences. 

Direct Pay only allows you to pay taxes for income taxes, estimated taxes, health care, civil penalties, retirement plans, and tax-favored accounts. Unlike direct pay, you can use EFTPS to make business-related tax payments. 

With Direct Pay, you can only make up to 2 payments in a 24-hour period and schedule payments up to 30 days in advance. Direct Pay is also only available during certain hours. You can schedule payments 24/7 up to 365 days in advance with EFTPS.

If you have signed up for email notifications, you can track your payments and use the included confirmation number to look up your most recent payment with the Direct Pay service. You can view up to 15 months of payment history with the EFTPS.

How To Enroll In EFTPS

The enrollment process can take up to 1 week, but it can be simple if you have your information ready. You will need your: 

• Taxpayer Identification Number (Employer Identification Number or Social Security Number);
• Bank account number and routing number; and
• Address and name as they appear on your IRS tax documents

Once you have gathered your information:

• Go to the enrollment page
• Select the enrollment tab
• Select business, individual, or federal agency
• Enter the required information
• Submit

You will receive an EFTPS letter with your PIN (personal identification number) in the mail within 5 to 7 business days. Once you have the PIN, you can go to EFTPS.gov to set up your password. You will need to authenticate with ID.me or Login.gov, or if you’re a federal agency worker, you can use your PIV/CAC. You will then need to verify your banking information or your EFTPS enrollment number.

If your business received a pre-enrollment letter, you can call 1.800.555.3453 to activate the enrollment.

Use your EIN/SSN, PIN, and internet password to log in. The system will prompt you to change your temporary internet password to a personalized password the first time you log in. You will also have to authenticate with Login.gov or ID.me to access the site. 

You use these same login credentials when using the EFTPS voice response system.

EFTPS Online Payment Benefits

Initially, the Department of Treasury instituted the EFTPS to decrease paperwork and save the department money. However, there are many benefits for the taxpayer. The top benefit is convenience because it allows you to make your tax payment from home or office any time of day, 7 days a week, online, or through the voice response system. EFTPS allows you to:

• Schedule payments up to 365 days in advance
• Pay your income, employment, estimated tax payments, and excise federal tax payments
• Easily change or cancel scheduled payments up to 2 days before the payment they are due
• Track your payment with email notifications
• View 15 months of payment history
• Get help from Customer Service Agents

When you make a payment, you receive an immediate acknowledgment that confirms your payment went through.

EFTPS Tax Payment Drawbacks

There are a few drawbacks to the EFTPS. The history only shows payments made through EFTPS. It won’t display any payments made through checks, electronic funds withdrawals from your bank account, money orders, or credit or debit cards. The system only shows the history as originally processed and does not display changes made after processing.

You need to know for which tax period you are submitting the payment and what the amount is. EFTPS will not show you the amounts due. 

You will also have to submit payments by 3 PM ET on a business day if you want them to be recorded that day. The payments also cannot be larger than $1,000,000.

Another challenge some users experience is phishing scams. Through email, social media, and text alerts, phishing scams send messages that suggest there is an error with your EFTPS information and prompt you to change your personal information. This scam happens outside the EFTPS, which uses multiple security measures to protect your personal information. The IRS may contact you through email, but only if you have opted in for email notifications. The IRS requests you report all instances.

FreshBooks Helps You Simplify Taxes and Save Time

Using the Electronic Federal Tax Payment System is a secure and convenient way to pay your federal taxes online. Now that you have a better understanding of how it works and the many benefits, you can take control of your payments and streamline your tax process. FreshBooks offers many articles and guides to help you and your small business through payroll, invoicing, filing tax returns, and more. FreshBooks accounting software can track and categorize expenses to help you capture every eligible deduction. Try FreshBooks free by signing up today to see how easy tax filing can be!

Written by Sandra Habiger, CPA

Sandra Habiger is a Chartered Professional Accountant with a Bachelor’s Degree in Business Administration from the University of Washington. Sandra’s areas of focus include advising real estate agents, brokers, and investors. She supports small businesses in growing to their first six figures and beyond. Alongside her accounting practice, Sandra is a Money and Life Coach for women in business.

Written by Sandra Habiger, CPA

Sandra Habiger is a Chartered Professional Accountant with a Bachelor’s Degree in Business Administration from the University of Washington. Sandra’s areas of focus include advising real estate agents, brokers, and investors. She supports small businesses in growing to their first six figures and beyond. Alongside her accounting practice, Sandra is a Money and Life Coach for women in business.