New tax deposit requirements for corporations

The IRS has issued proposed regulations that would require corporations to make deposits of employment taxes, corporation income and estimated taxes and many other taxes by electronic payment.  These proposed regulations will eliminate the use of paper coupons for many corporations to pay taxes.

The rule change will require affected corporations to make tax payments by the Electronic Federal Tax Payment System (EFTPS).  The regulations require that all subject payments made after the finalization of the regulations are required to be made by EFTPS.  However, the effective date will be no earlier than January 1, 2011.

Taxes impacted by new deposit requirements include:

1. Corporate income and corporate estimated taxes pursuant to §1.6302-1 ;
2. Unrelated business income taxes of tax-exempt organizations under section 511 pursuant to §1.6302-1 ;
3. Private foundation excise taxes under section 4940 pursuant to §1.6302-1 ;
4. Taxes withheld on nonresident aliens and foreign corporations pursuant to §1.6302-2 ;
5. Estimated taxes on certain trusts pursuant to §1.6302-3 ;
6. FICA taxes and withheld income taxes pursuant to §31.6302-1 ;
7. Railroad retirement taxes pursuant to §31.6302-2 ;
8. Nonpayroll taxes, including backup withholding pursuant to §31.6302-4 ;
9. Federal Unemployment Tax Act (FUTA) taxes pursuant to §31.6302(c)-3 ; and
10. Excise taxes reported on Form 720, Quarterly Federal Excise Tax Return, pursuant to §40.6302(c)-1 .