The Internal Revenue Service recently issued proposed regulations (in REG 153340-09) which will eliminate the use of paper coupons rather than electronic payments for a variety of federal tax deposits, effective beginning with payments due in 2011.


Under current regulations, depositors whose aggregate annual federal tax deposits exceed $200,000 generally must use the Treasury Department’s Electronic Federal Tax Payment System (EFTPS) to pay their deposits. Depositors not currently required to use EFTPS for deposits may instead use a paper-based coupon system to make a deposit by presenting a check and a coupon to a bank teller at one of approximately 8,000 financial institutions authorized as a government depositary or to a financial agent, a process that dates back to World War I.

Basic Effect of the Proposed Regulations

The proposed regulations require all deposits of the following federal taxes to be made by EFTPS beginning January 1, 2011:

  • Corporate income and corporate estimated taxes pursuant to Treasury Regulations(TR) Sec. 1.6302-1;
  • Unrelated business income taxes of tax-exempt organizations under InternalRevenue Code (IRC) Sec. 511 pursuant to TR Sec. 1.6302-1;
  • Nonpayroll taxes, including backup withholding pursuant to TR Sec. 31.6302-4;
  • Federal Unemployment Tax Act (FUTA) taxes pursuant to TR Sec. 31.6302(c)-3;and
  • Excise taxes reported on Form 720, Quarterly Federal Excise Tax Return, pursuant to TR Sec. 40.6302(c)-1.