Thought your company would be safe as long as it paid all its tax obligations on time? Think again. Turns out, if you’re mandated to use electronic payments for taxes and you don’t, the feds can – and will – come down hard.
Fallu Productions, a film company, paid its federal employment taxes in full and on time for six straight quarters in 2001 and 2002. But it didn’t use the mandated Electronic Federal Tax Payment System (EFTPS).
Eventually, IRS imposed failure-to-deposit penalties on the company – claiming a “deficiency in the form of payment.” The company fought the suit, but the courts ruled against it.
Even if e-payments aren’t yet mandated for your company, it’s a good idea to get familar with the processes.
Each year more state and federal tax payments – ranging from employment taxes, sales and use taxes, etc. – are required to be sent in electronically. It’s only a matter of time until you’ll be affected.

Have you been mandated to use EFTPS or a similar system? Let us know what you like — or what you don’t — in the comments.

Tags: E-filing, Penalties, Tax compliance