This chapter guides financial institutions that process Federal tax collections using the Electronic Federal Tax Payment System (EFTPS) and the Federal Tax Application (FTA).

This chapter prescribes the guidance for using EFTPS and FTA to report Federal tax payments and deposits to the Federal Government.

Title 31 CFR 203.

For terms and definitions related to this chapter, please view the TFM Glossary.

EFTPS and FTA enable taxpayers to report Federal tax payments and deposits to the federal government using electronic reporting methods. Using these programs, taxpayers may transfer their payments or deposits using certain electronic funds transfer (EFT) technologies.

2025.10—Role of Financial Institution

Financial institutions have an integral role in the tax collection process. With EFTPS, a financial institution chooses the extent to which it will service its customer's Federal tax payment needs.

Financial institutions may provide the following electronic services to meet their customers' Federal tax payment needs:

For Internal Revenue Service (IRS) audit purposes, a taxpayer may seek proof of a timely funds transfer from its financial institution. If requested by the taxpayer, financial institutions must provide information such as:

To further assist customers, financial institutions should use the term "USATAXPYMT" or otherwise clearly identify EFTPS payments on customer account activity statements.

2025.20—EFTPS Functions

EFTPS does the following:

2025.30—FTA Functions

The FTA provides a same-day payment mechanism that works in conjunction with EFTPS. The FTA uses the Fedwire funds transfer system for same-day payments. FTA does the following:

Treasury requires that all EFTPS taxpayers enroll with EFTPS before making an electronic Federal tax payment via ACH debit or credit.

Taxpayers who change financial institutions, or who change their accounts within a financial institution, may edit their banking information with EFTPS. This may be accomplished by touch-tone phone or EFTPS Online at https://www.eftps.gov.

2030.10—Enrollment Form Availability

Taxpayers may obtain enrollment forms by calling 1-800-TAX-FORM (1-800-829-3676), or by enrolling online at https://www.eftps.gov.

2030.20—Financial Institution Enrollment Responsibilities

At the request of a taxpayer that selected ACH debit as a funds transfer method, a financial institution must verify the accuracy of the financial institution's routing transit number (RTN) and the taxpayer account number and account type indicated on the enrollment form. The taxpayer must ensure the completed enrollment form gets to the EFTPS enrollment processing center. The financial institution may offer this delivery service to its customers.

A financial institution may establish conditions the taxpayer must satisfy before it will effect the electronic tax transaction. For example, a financial institution may specify a cutoff time for receipt of a customer's Federal tax payment instructions. If conditions are not satisfied, the financial institution may return an ACH debit entry and/or refuse to originate an ACH credit entry or a same-day tax payment.

2035.10—Risk

There are operating risks for financial institutions that process payments and deposits using ACH credit and same-day payment and deposit methods. For example, Treasury may assess a financial institution interest for an incorrect ACH credit entry or same-day payment (see Section 2050). The financial institution does not encounter these risks with ACH debit transactions. The financial institution should establish guidelines consistent with the level of risk it is willing to assume.

2035.20—Guidelines

A financial institution should publish, or otherwise make available to its customers, the guidelines it uses when originating ACH credits and/or same-day Federal tax payments. At a minimum, these guidelines should identify the following:

EFTPS supports two future-day payment mechanisms: ACH debit and ACH credit. Any financial institution capable of originating and/or receiving ACH transactions, itself or through a correspondent, may offer these services to its taxpaying customers.

2040.10—ACH Debit

For ACH debit payments, the taxpayer or the taxpayer's agent reports the Federal tax payment information to EFTPS using one of the available EFTPS reporting methods. EFTPS conducts online, real-time editing and validation of the Federal tax payment information. It issues the taxpayer an acknowledgment or EFT number to confirm a timely deposit report. EFTPS originates the ACH debit entry to the taxpayer's account for same-day settlement or 1 business day prior to the settlement date designated by the taxpayer for next day settlement.

2040.10a—RDFI Responsibilities

An RDFI does the following:

An RDFI also uses an NOC when a merger results in changes to the financial institution's RTN and/or the customer account number or type of account.

ACH debit, through EFTPS, offers taxpayers a warehousing capability. Warehousing provides taxpayers the ability to schedule, as soon as the amount is known, future deposits or payments for settlement on the due dates. This feature eliminates the taxpayer burden of remembering to initiate a deposit 1 business day before the tax due date. Using this warehousing capability, business and individual taxpayers may schedule a future-day settlement up to 365 calendar days in advance. Taxpayers are encouraged to use the warehousing capability of EFTPS whenever possible.

2040.10b—ACH Debit Corrections

Consistent with standard ACH rules and guidelines, EFTPS or RDFIs may take the following actions:

2040.10c—Tax Payment Identification

The RDFI should identify Federal tax payments on a customer's statement. For example, the RDFI may use the term, "USATAXPYMT," available in field 7 (company entry description field) of the ACH company batch header record.

2040.20—ACH Credit

For ACH credit payments, the taxpayer's financial institution originates an ACH credit entry to Treasury's account at an FRB. The ACH credit addenda record contains the Federal tax payment detail. The FRB transmits the payment detail to EFTPS for validation and transmission to IRS.

2040.20a—ACH Credit Prenotification Process

During the ACH credit prenotification process, ensure that the guidance provided below is followed.

Zero-Dollar Entry with Tax Payment (TXP) Addenda Record or Prenotification Entry with TXP Addenda Record—At the taxpayer's request, a financial institution originates either:

The EFTPS's account information includes:

Return of a Zero-Dollar or Prenotification Entry—EFTPS reviews all zero-dollar and prenotification entries. If the entries contain incorrect taxpayer information (for example, the TIN in the entry detail record is missing or invalid) or if the taxpayer is not enrolled in EFTPS, then EFTPS returns the entry to the ODFI. EFTPS must return the zero-dollar entry, so it is available to the ODFI no later than the opening of business on the 2nd business day following the settlement date of the original zero-dollar entry. EFTPS must return the prenotification entry, so it is available to the ODFI no later than opening of business on the 6th business day following the settlement date of the original prenotification entry.

The taxpayer's financial institution carefully reviews and makes any necessary corrections to the information before originating another zero-dollar or prenotification entry. The financial institution may contact the EFTPS TFA help line for assistance. The EFTPS help line number for financial institutions is 1-800-605-9876.

Failure To Originate a Zero-Dollar or Prenotification Entry—Treasury may assess interest to a financial institution that fails to originate a zero-dollar or prenotification entry at a taxpayer's request, causing a future ACH credit entry to be returned. Refer to Section 2050 for interest calculation information.

ODFI Responsibilities for Originating an EFTPS ACH Credit—An ODFI must originate ACH credit entries at least 1 business day prior to the date the taxpayer requires the payment to settle. It originates the payment using the cash concentration or disbursement ACH format with TXP addenda record (CCD+TXP) banking convention to the appropriate Treasury RTN and account number.

Tax Payment Identification—The ODFI should identify Federal tax payments on a customer's statement. For example, the ODFI may use the term, "USATAXPYMT," available in field 7 (company entry description field) of the ACH company batch header record.

ACH Credit Corrections—Consistent with ACH rules and guidelines, the following ACH credit corrections are permitted:

Notification of Change—EFTPS may originate NOC entries, when needed.

FTA provides electronic same-day payment for the deposit and payment of Federal taxes via Fedwire® value (Type code 1000) transfer.

The Fedwire® application has a preformatted screen for entering taxpayer detail, via FedLine Advantage®, containing built-in edits for tax information.

Financial institutions may obtain detailed information on format, reversal procedures, adjustments, and interface with the investment program from the FTA Customer Service Unit (1-800-382-0045). The Financial Institution Handbook at https://www.eftps.gov also provides formatting information.

2045.10—Deadline for Transmission of Same-Day Federal Tax Payments

A financial institution must send same-day Federal tax payments so that FTA receives them no later than 5 p.m. eastern time (ET). FTA will return deposits received after 5 p.m. to the originator. The taxpayer or the financial institution may be assessed a late fee for returned tax payments if it results in tax payments not made in a timely manner.

2045.20—Fedwire® Value (Type code 1000) Transfer Settlement

Fedwire® value tax payments settle immediately in the Fedwire® system. It debits the financial institution's reserve account and credits Treasury's account the day of the transfer.

2045.30—Fedwire® Value (Type code 1000) Transfer Format

The Fedwire® value tax payment uses a specific format and a customer transfer (CTR) product code. Refer to the Financial Institution Handbook at https://www.eftps.gov or contact the FTA Customer Service Unit at 1-800-382-0045.

2045.40—Correction of Erroneous Entries Before the 5 p.m. ET Cutoff on Settlement Day

A financial institution may correct erroneous same-day Federal tax payments by reversing the entire erroneous transaction and, if applicable, initiating a corrected transaction before 5 p.m. ET on the settlement date. Financial institutions should send a Fedwire Request for Reversal (Type code 1001) to request that the FTA return the erroneous Fedwire. The reversal must be for the total dollar amount of the original transaction. Contact the FTA Customer Support Unit at 1-800-382-0045 or refer to the Financial Institution Handbook at https://www.eftps.gov for additional information.

If a financial institution requests a reversal of a Fedwire® transfer before the 5 p.m. ET cutoff, the FTA will return the funds to the originating institution. If applicable, the financial institution should initiate a corrected Fedwire® value payment before the 5 p.m. ET cutoff.

Financial institutions can reverse transactions up to 5 business days following the date of the original transaction. Financial institutions should send a Fedwire Request for Reversal of a Prior Day Transfer (Typecode 1007). Reversal requests beyond 5 business days should be made to the IRS.

2045.50—Correction of Erroneous Entries After 5p.m. ET on Settlement Day

Financial institutions direct requests for adjustments made the same day but after the 5 p.m. ET cutoff to the FTA Customer Support Unit at 1-800-382-0045 as soon as possible. They should provide an explanation of the error and request an adjustment.

2045.60—Rejection of Same-Day Federal Tax Payment

The FTA may reject a same-day Federal tax payment for the following reasons:

The financial institution must notify its customers in a timely manner of a rejection or reversal that results in a deposit or payment not settling on the taxpayer's requested settlement date.

2050.10—Computation and Basis of Penalties for Improper Processing of EFT Payments

Treasury may charge a financial institution for the value of delayed Federal tax payments. It may assess this charge if the taxpayer meets the financial institution's conditions for making an EFTPS deposit or payment (Sections 2030 and 2035), and the financial institution fails to process the payment properly. Treasury assesses interest from the date the Federal tax payment should have settled to the TGA to the date the payment actually settled to the TGA. Treasury assesses a financial institution interest to recoup the earnings value of funds lost. It computes the penalty using the interest rate factor for penalties under EFTPS.

Treasury assesses interest from the day the taxpayer specified settlement to Treasury until receipt of the payment by Treasury. It determines the assessed interest by multiplying the total delay in 1-day funds by the daily interest rate factor for penalties (under EFTPS). The daily interest rate factor for the penalty is the Federal Reserve Federal Funds daily effective rate minus 25 basis points. If the subtraction of 25 basis points from the Federal Reserve Federal Funds daily effective rate results in a negative rate, the penalty rate (and the penalty) will be zero.

Treasury will debit the financial institution's reserve account, or the account of its designated correspondent, for the amount of the penalty.

2050.20—Financial Institution Limitation of Liability

Financial institution liability is subject to the following limitations:

The limitation of liability applies only to any interest assessment in which there is unauthorized use, indication of fraud, presentment of a false claim, or misrepresentation or embezzlement on the part of the financial institution or any of its employees or agents.

2050.30—Unauthorized ACH Entries to the TGA

A financial institution must not originate an ACH entry that results in an unauthorized debit to the TGA.

2050.40—Computation and Basis of Charges for Unauthorized ACH Entries to the TGA

A financial institution that originates an unauthorized ACH entry to debit the TGA is liable for the amount of the transaction and charges. Treasury determines the interest charge by multiplying the amount of the unauthorized entry for each calendar day by the daily interest rate factor that is defined in subsection 2050.10. It calculates the interest charge from the date the TGA was debited to the date the TGA was credited.

According to 31 CFR 210.8(b)(1) (Federal Government Participation in the Automated Clearing House), there is no limitation of liability, either time or amount, for unauthorized ACH entries to the TGA. This does not preclude any other sanctions.

Treasury will debit the financial institution's reserve account, or the account of its designated correspondent, for the amount of the charge.

2050.50—Appeal Process for Penalties

A financial institution may appeal any penalty or charge imposed under Section 2050 by contacting the Fiscal Service Tax Collection Division (see Contacts specific contact information).

The Director of the Fiscal Service Tax Collection Division will issue decisions on appeals (via email or postal mail) within 45 calendar days of notification. The Director, however, may unilaterally extend the deadline for issuing a decision by providing the financial institution with written notice of the extension that includes an anticipated final ruling date. The Director's decision, whether issued within the 45-day timeframe or at the end of an extension period, is final.

If an over recovery or under recovery of the assessment or charge occurs, then Treasury will reimburse the financial institution by instructing the FRB to credit or debit the reserve or clearing account of the financial institution, or the account of its designated correspondent, as appropriate.

Direct inquiries concerning this chapter and appeals for penalties to:

Department of the Treasury 
Bureau of the Fiscal Service 
Tax Collection Division

202-874-5321