Lesson 3 - Filing and paying taxes electronically
Small Business Tax Workshop
    References (Links)

    Introduction and Benefits of E-Filing

    Male Host: Hello and welcome to filing and paying taxes electronically.

    Thanks for joining us.

    Female Host: In this workshop, we'll describe IRS E-File and its benefits for your individual and business returns, as well as describing electronic payment options, so you can determine which is best for your business.

    By the end of this workshop, we hope to convince you of the benefits of filing and paying your taxes, electronically.

    Male Host: Before we discuss your specific business situation, let's talk about the benefits of electronic filing.

    First, e-filing is convenient.

    You'll receive a fast electronic acknowledgement that the IRS has received your return.

    Second, e-filing is accurate.

    There are few risks of math errors and of receiving a letter from the IRS.

    If there are any errors on the return, you'll receive an easy to understand error message in plain language.

    Third, e-filing is safe.

    Your tax information is secure and only authorized IRS employees have access to the system.

    Female Host: Fourth, just as you filed electronically, you can receive a refund electronically by providing your bank's routing number; the type of account, either checking or savings; and your account number.

    Finally, if you use tax preparation software, the software performs your calculations and highlights needed forms and schedules.

    You can buy your own software or you can choose a tax preparer who is an authorized IRS e-file provider.

    You may even be eligible to electronically file your federal returns for free through an IRS partner. And signing your return is simple and electronic. You can choose your own 5-digit personal identification number, or pin, to sign your return. For additional information, go to irs.gov/smallbiz with a "z" and go to the Preparing Your Taxes section and choose employment taxes.

    Customize this Lesson for your Business

    Now, we have some questions and your answers will help us customize a segment for you.

    Please answer the following questions as they pertain to you and your business.

    How is your business organized?

    Choose one now from the selections on your screen.

    Is it a sole proprietor, a partnership, a corporation, charity, or non-profit?

    Do you pay your taxes electronically?

    [music playing] Now, do you pay your taxes electronically?

    [silence]

    Sole Proprietor

    As a self-employed sole proprietor when you do file your form 1040 electronically you'll complete a schedule C to report your business income and expenses.

    Schedule C is included in the Form 1040 software package you purchased.

    So there's no need to purchase additional business tax software.

    This software does all of the math and it even calculates depreciation for you.

    And if you use a tax preparer their software can take care of everything too.

    Partnership

    Large partnerships of over 100 partners are required to file electronically.

    All other partnerships, however, may choose to voluntarily file their Form 1065 U.S. Return of Partnership Income, electronically, regardless of the number of partners.

    A complete list of approved IRS e-file for business providers who offer the Form 1065 e-file product can be found at www.irs.gov.

    Just click on the area for "File" and go to the section for "Business & Self-Employed".

    There you will find more information, as well as links to companies' websites.

    You may be able to enter your return information online using software provided by the Form 1065 e-file provider of your choice.

    The provider will then transmit your Form 1065 and Schedule K-1, Partner's Share of Income, Deductions, Credits, etc. to the IRS.

    Corporation

    (Music playing) Corporations can electronically file Form 1120 U.S. Corporation Income Tax Return, Form 1120-F U.S. Income Tax Return of a Foreign Corporation and Form 1120-S U.S. Income Tax Return for an S Corporation, as well as associated forms and schedules.

    Any business taxpayer who files these forms, may electronically file their return through an authorized IRS e-file provider.

    A listing of 1120 Return e-file approved providers is available at www.irs.gov If you are a corporate filer, who would like to participate in 1120, 1120F, or 1120S e-file, talk to your tax preparer to see if they offer it to their clients.

    Some corporations are required to file electronically.

    Those corporations with $10 million or more in total assets, and that file 250 or more returns a year, are required to electronically file their Form 1120, 1120F, and 1120S.

    The total number of returns is determined by aggregating all returns regardless of type, that are required to be filed over the calendar year including income tax returns.

    Returns required under Section 6033 of the Internal Revenue Code.

    information returns, excise tax returns, and employment tax returns. 

    Charity or Non-profit

    [music playing] Charities and non-profits can electronically file the following forms through an IRS authorized e-file provider: Form 990, Return of Organization Exempt from Income Tax.

    Form 990 EZ, the short form.

    Form 1120-POL, US Income Tax Return for Certain Political Organizations.

    Form 8868, Application for Extension of Time to File an Exempt to Organization Return.

    Form 990-PF, Return of Private Foundation and Form 990-N.

    Most small tax-exempt organizations whose annual gross receipts are normally $50,000 or less are required to electronically submit Form 990N, also known as the e-Postcard unless they choose to file a complete Form 990 or Form 990EZ.

    To complete Form 990N go to irs.gov/990n and follow the directions to register, create, and send your e-Postcard.

    Any exempt organization, may electronically file their return through an approved IRS e-file for business provider.

    You can access the continuously updated approved providers at www.irs.gov.

    Your organization may even be eligible to electronically file the 990 EZ for free through an IRS partner.

    If you're a non-profit who would like to participate in 990 e-file, please talk to your tax preparer to see if they offer electronic filing to their clients.

    You can find additional information about electronic filing for charities and nonprofits at www.irs.gov.

    It is under the charities and nonprofit section.

    Additionally, electronic filing of employment returns is available at irs.gov/businesses.

    Look for the employment taxes section.

    [END]

    Benefits of Paying Electronically

    [Music playing] There are two ways to pay electronically.

    Electronic Funds Withdraw, also known as EFW, and the Electronic Federal Tax Payment System, also known as EFTPS.

    Electronic Funds Withdrawal

    EFW is a way for you to pay money you owe when you file your taxes.

    When you use EFW, you authorize the US Department of Treasury, through a treasury financial agent, to transfer money from your bank account to the Treasury account.

    You enter your bank routing number, your bank account number, and the account type such as checking or savings, that you want the payment withdrawn from.

    This is instantaneous, and there is no charge, but make sure you check with your financial institution about any fees, it may charge.

    The payment date is the same as the date the balance due return is filed, and the funds are withdrawn in a single transaction, not in installments.

    You can call the IRS e-file Payment Inquiry and Cancellation Service toll free at 1-888-353-4537 to inquire about payments.

    Wait seven to ten days after your return was accepted before making inquiries.

    Contact the IRS e-Help Desk immediately at 1-866-255-0654 if there is an error in the amount withdrawn.

    Additionally, www.irs.gov/payments provides detailed information on electronic payment of taxes.

    Electronic Filing Tax Payment System (EFTPS)

    More than 12 million taxpayers are currently enrolled in the Electronic Filing Tax Payment System, and it is especially useful to business taxpayers with employees because it makes it easy for them to make deposits of withheld employee income and payroll taxes. Also, you can use EFTPS to pay your own quarterly estimated taxes.

    In addition, EFTPS is safe, secure and private. It is also available 24/7. You have the ability to schedule payments when you want and you'll receive immediate confirmation of every transaction. Also, you can check up to 16 months of your EFTPS payment history online or by calling EFTPS customer service. You have two options for enrolling in EFTPS, and both are free. Online enrollment is available at www.eftps.gov. You will receive your Personal Identification Number, or PIN, in the mail within five to seven business days.

    If you would like to enroll by mail, you can call EFTPS at 1-888-725-7879, Monday - Friday 9 a.m. to 6 p.m. ET and request the enrollment form by mail. You will then receive your PIN within seven business days after your completed form is received by EFTPS. As soon as you receive your PIN, you can begin scheduling payments. If you use eftps.gov, follow the prompts to set your internet password. If you wish to schedule payments by phone, just call 1-800-555-3453.

    Also, if you receive a pre-enrollment letter from EFTPS, you can activate your enrollment by calling the same number. You'll need your financial institution's routing number and your account number. 

    EFTPS Payment Methods

    [Music playing] There are two primary EFTPS payment methods for business owners.

    EFTPS direct and EFTPS through a financial institution.

    EFTPS Direct is an electronic payment method that allows you to access EFTPS directly, either by phone or online to pay your taxes.

    Make sure that you have your PIN and EIN or SSN.

    You will be prompted for any other information necessary to complete your tax payment as you go along.

    You'll need to submit your tax payment information by 8 P.M. Eastern Time at least one day prior to your due date at EFTPS.gov or check the EFTPS website for the number to call for payment.

    After submitting your information, you will immediately receive an electronic funds transfer acknowledgement number to keep for your records.

    If you want to cancel a payment you must do so by 11:59 P.M. Eastern Time at least two business days before the scheduled date.

    EFTPS will then debit your designated bank account on the date that you schedule.

    Your tax data will be reported to the IRS and your records will be updated automatically.

    You may check the status and history of any payment you made using EFTPS in the last 16 months at www.EFTPS.gov In the second method, EFTPS through a financial institution, you instruct your financial institution to electronically move funds from your account to the Treasury account.

    Not all financial institutions, however, offer this service, so before selecting this option check with your bank to see if they offer this service, how much it costs and if you're eligible to use it. Remember it's your responsibility to initiate payments or to authorize a trusted third party such as a tax professional or payroll service to initiate the payment for you. If you choose to allow your payroll company to make tax payments on your behalf, check with them for specific fees, deadlines and instructions for enrollment in EFTPS.

    If your payroll company is not making all of the tax payments through EFTPS, you will need to enroll in EFTPS to make those payments.

    Even if you do enroll in a payroll company to pay all of your taxes, it is still a good idea to enroll in EFTPS separately.

    This allows you to check on and ensure that your payroll company is making the payments on your behalf.

    It also provides flexibility if you ever need to change payroll companies in the future.

    For more information on EFTPS go to www.irs.gov and click on the EFTPS logo or go directly to the EFTPS website at www.eftps.gov.

    And don't forget to review IRS Publication 966, Electronic Federal Tax Payment System: A Guide to Getting Started.

    Summary

    [Music Playing] Depending on how you answer the questions at the beginning of the workshop, you've learned quite a lot about filing and paying federal income taxes electronically.

    We hope we've given you some very convincing reasons to consider filing and paying electronically.

    If you're an employer, please join us for the workshop about filing and paying your employment taxes electronically.

    We hope you'll take advantage of our IRS e-file and e-pay options.

    You now know that e-file and e-pay streamline the tax process and make things easier for you.

    Thank you for joining us for this workshop.

    Best wishes for your business.

    How is your business organized?
    Do you pay your taxes electronically?