COMPTROLLER'S SEAL STATE OF CONNECTICUT
STATE OF CONNECTICUT
NANCY WYMAN
COMPTROLLER
OFFICE OF THE STATE COMPTROLLER
55 ELM STREET
HARTFORD, CONNECTICUT 06106-1775
MARK OJAKIAN
DEPUTY COMPTROLLER

MEMORANDUM NO. 95 - 4

January 20, 1995

TO THE HEADS OF ALL STATE AGENCIES

Attention:Chief Administrative and Fiscal Officers, Business
Managers, Payroll and Personnel Officers
Subject: Federal Tax Deposits by Electronic Funds Transfer
  1. AUTHORITY

    On July 11, 1994 the Department of the Treasury, Internal Revenue Service (IRS) released temporary regulations in the Federal Register relating to the deposit of taxes by electronic funds transfer. The temporary regulations reflect changes to section 6302 of the Internal Revenue Code (IRC) of 1986 by enacting a new subsection (h) authorizing the Secretary of the Treasury to prescribe such regulations as may be necessary for the development and implementation of an electronic funds transfer (EFT) system to be used for the collection of depository taxes.

  2. APPLICABILITY

    The following information is applicable to any state agency that currently makes federal tax deposits. We would like to emphasize that any state agency filing their own federal tax deposits must use their own employer identification number (EIN) for reporting to the IRS.

    Please reference Comptroller Memorandum No. 94-8, entitled, "Internal Revenue Service (IRS) Issues", dated March 31, 1994 for additional information regarding this issue.

  3. CURRENT TAX DEPOSIT SYSTEM

    Presently, taxpayers are required to deposit taxes with an authorized government depository (generally a commercial bank or savings institution or a Federal Reserve bank) by various dates specified in the regulations. Each deposit must be accompanied by Form 8109, Federal Tax Deposit Coupon, which

    contains the taxpayer's name, identification number, the amount and the type of tax being deposited and the tax period for which the deposit is being made. The government depository forwards the coupon to the appropriate IRS Service Center. The Service Center compares the information entered on the coupon with the liabilities reported by the taxpayer on the return for the applicable tax period. The funds are transferred by the depository to the Treasury on the business day following the day of the deposit.

  4. ELECTRONIC TAX DEPOSIT SYSTEM

    Section 6302(h) of the IRC authorizes a new system which will allow for the transfer of tax deposit amounts electronically from taxpayer accounts to the Treasury's general account. The new system will be phased in over a period of several government fiscal years, beginning with fiscal year 1994 (October 1, 1993 to September 30, 1994) by gradually increasing the percentage of the total depository taxes required to be collected by EFT. The temporary regulations implement this phase-in by gradually increasing the number of taxpayers that must deposit all of their depository taxes by EFT. The requirement to deposit by EFT under these temporary regulations applies only to those taxpayers required to make deposits pursuant to regulations under section 6302 of the Code, and only for those taxes required to be deposited.

    If a taxpayer's total deposits of the taxes imposed by chapters 21, 22 and 24 during the determination period exceed a prescribed dollar threshold, the taxpayer must begin depositing by EFT on and after the applicable effective date prescribed in the regulations, unless otherwise exempted. (A taxpayer will become subject to the EFT requirement for the applicable effective date "January 1, 1996" by exceeding the threshold amount during either calendar years 1993 or 1994). The phase in schedule is as follows:

    Threshold amountDetermination PeriodApplicable Effective Date
    $78 million1-1-93 to 12-31-93January 1, 1995
    $47 million1-1-93 to 12-31-93January 1, 1996
    $47 million1-1-94 to 12-31-94January 1, 1996
    $50 thousand1-1-95 to 12-31-95January 1, 1997
    $50 thousand1-1-96 to 12-31-96January 1, 1998
    $20 thousand1-1-97 to 12-31-97January 1, 1999

  5. QUESTIONS

    If you have any questions or need assistance regarding this matter please contact the Accounting Systems Division at 566-5337.

NANCY WYMAN
STATE COMPTROLLER

Back to Comptroller's Home Page
Back to Index of Comptroller's Memoranda