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By Russell Kuehn, Tax Collection Division

FEDTAX II, the system many federal program agencies (FPAs) use to transmit federal tax deposits and forms, will not be available after November 30, 2009. The Financial Management Service (FMS) will assist FPAs in moving to the Electronic Federal Tax Payment System (EFTPS) to make those payments.

EFTPS, a free service of the Internal Revenue Service (IRS) and FMS, launched in 1996. Since its inception, EFTPS has processed more than 875 million transactions totaling more than $20 trillion. Many federal FPAs already use EFTPS.

On approximately October 26, 2009, all current FEDTAX II FPA contacts will receive a pre-enrollment letter from EFTPS. At that time, FPAs will be able to download relevant documents at www.eftps.gov and www.fedtaxii.com.

In addition, Webinars will be held on October 27 at 10 a.m. ET; October 28 at 4 p.m. ET; November 17 at 10 a.m. ET; and November 18 at 4 p.m. ET to walk FPA users through the payment process. Information about registering for the Webinars will appear at www.fedtaxii.com.

FPAs will be able to complete the following tasks using EFTPS.gov:

• Electronically file 941 tax forms.
• Fill out and print 945 and CT-1 tax forms and mail the forms to the IRS.
• Make payments for 941, 945, CT-1, 720, and 1042 tax forms.

The calculations to complete the forms will need to be done by the FPAs before payments are scheduled.

FPAs can make payments to settle the same day by meeting the 8:00 p.m. ET deadline or by scheduling payments up to 120 days in advance.

Existing FEDTAX II information will not be available after the system is decommissioned. FPAs will need to save these data on another medium (paper, disk, etc.). The historical information may include enrollment information, payment activity, filing activity, and wage data.

Once FPAs begin using EFTPS.gov, up to sixteen months of filing and payment   history can be viewed.

This transition is part of the larger FMS Collections and Cash Management Modernization (CCMM) strategy, which aims to reduce the number of systems and processes and eliminate duplication of data, applications, products, interfaces, and technologies. FEDTAX II has been in existence for more than ten years, and its maintenance increases the cost of tax code compliance which results in significant overhead expenses.

Until FPAs receive the letter in early November, they should continue to use FEDTAX II and contact FEDTAX II (1-877-FED-TAX2) with any questions (Monday through Friday between 6 a.m. and 6 p.m. ET). As FPAs make the transition and beyond, they may continue to use this number for assistance with payment and enrollment questions.

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