SECTION 2. BACKGROUND

.01 Section 6302(c) of the Internal Revenue Code provides that the Secretary of the Treasury (Secretary) may authorize Federal Reserve banks, and incorporated banks and other financial institutions that are depositories or financial agents of the United States, to receive any tax imposed under the internal revenue laws, in such manner, at such times, and under such conditions as the Secretary may prescribe. Section 6302(c) also provides that the Secretary shall prescribe the manner, times, and conditions under which the receipt of such tax by such banks and other financial institutions is to be treated as a payment of such tax to the Secretary.

.02 Section 6302(h) requires the Secretary to establish an electronic funds transfer (EFT) system to collect depositary taxes (FTDs). EFTPS is the EFT system developed by the Secretary to collect federal taxes (FTDs and FTPs). See § 31.6302–1(h)(4)(i) of the Employment Tax and Collection of Income Tax at Source Regulations, and Rev. Proc. 97– 33, 1997–30 I.R.B. 10. .03 Some taxpayers are required by the regulations issued under § 6302(h) to make FTDs using EFTPS. See § 31.6302–1(h)(2)(i)(A). Taxpayers not required to make FTDs using EFTPS may choose to do so voluntarily. Taxpayers also may choose to make FTPs using EFTPS.

.04 All Filers using the Batch Filer or Bulk Filer programs must comply with this revenue procedure, and with the Implementation Guide for EFTPS Batch Filers, or the Implementation Guide for

1998–17 I.R.B. 11 April 27, 1998

EFTPS Bulk Filers, whichever is applicable.

.05 The two primary remittance methods in EFTPS are an Automated Clearing House (ACH) debit entry and an ACH credit entry. Filers may also use an Electronic Tax Application (ETA) transaction. These remittance methods are defined in section 3 and described in sections 9, 10, and 11 of this revenue procedure.

and Direct Access transactions. A single ETA transaction is a transfer of funds representing one FTD or FTP. A bulk ETA transaction (a remittance method available only in the Bulk Filer program) is a transfer of funds representing multiple FTDs or FTPs. See section 11 of this revenue procedure for information on an ETA transaction.

.10 Employer identification number (EIN). An “EIN” is a unique nine digit taxpayer identifying number issued by the Internal Revenue Service to business taxpayers for the purpose of reporting tax related information.

.11 Federal Reserve Bank (FRB). The “FRB” is the U.S. Government’s fiscal agent. The FRB also processes ACH transactions to a commercial financial institution account or to a Treasury Department account.

.12 Filer. A “Filer” is a person making FTDs or FTPs on behalf of multiple taxpayers in the Batch Filer or Bulk Filer program. Each Filer must be either the taxpayer or a person authorized to act on behalf of the taxpayer.

.13 Financial Agent. For purposes of EFTPS, a “Financial Agent” (also referred to as a “Treasury Financial Agent”) is a financial institution that is designated as an agent of the Treasury Department. The Secretary has designated NationsBank and First National Bank of Chicago (First Chicago) to be the Financial Agents for EFTPS. A Financial Agent processes Batch Filer and Bulk Filer registrations, processes taxpayer enrollments, receives payment information, originates ACH debit entries upon instructions from taxpayers or Filers, and provides customer service assistance for EFTPS enrollment and payment information.

.14 IRS individual taxpayer identifica- tion number (ITIN). An “ITIN” is a taxpayer identifying number issued by the Service to an alien individual who is ineligible to receive a social security number (SSN) for the purpose of reporting tax related information.

.15 Prenotification ACH credit. “Prenotification ACH credit” is a process whereby a financial institution verifies the appropriate Treasury Routing Transit Number (RTN), the Treasury Department’s account number, and the taxpayer’s taxpayer identification number (TIN).

.06 Filers participating in EFTPS must ensure that taxpayers’ funds are remitted on a timely basis. See § 31.6302–1(h)(8) for rules regarding when an FTD remitted by EFTPS is deemed made. For FTDs and FTPs remitted by EFTPS, see § 31.6302–1(h)(9) for rules regarding when the tax is deemed paid.

transfer system, governed by the ACH Rules (the Operating Rules and the Operating Guidelines published by National Automated Clearing House Association (NACHA)) that provides for the interbank clearing of electronic entries for participating financial institutions.

.05 ACH credit entry. An “ACH credit entry” is a transaction in which a financial institution, upon instructions from a Filer, originates an FTD or FTP to the appropriate Treasury Department account through the ACH system. An ACH credit entry is a transfer of funds representing one FTD or FTP. There are no “bulk” ACH credit entries. See section 10 of this revenue procedure for information on an ACH credit entry.

.06 ACH debit entry. An “ACH debit entry” is a transaction in which one of the Financial Agents, upon instructions from a Filer, instructs the Filer’s or the taxpayer’s financial institution to withdraw funds from a designated account for an FTD or FTP and to route the FTD or FTP to the appropriate Treasury Department account through the ACH system. A single ACH debit entry is a transfer of funds representing one FTD or FTP. A bulk ACH debit entry (a remittance method available only in the Bulk Filer program) is a transfer of funds representing multiple FTDs or FTPs. See section 9 of this revenue procedure for information on an ACH debit entry.

.07 Batch Filer. A Batch Filer is a Filer that is registered under the Batch Filer program. A Batch Filer submits multiple electronic enrollment files at one time and uses a personal computer or telephone for making FTDs or FTPs.

.08 Bulk Filer. A Bulk Filer is a Filer that is registered under the Bulk Filer program. A Bulk Filer uses Electronic Data Interchange (EDI) files to transmit and receive enrollment or payment information. A Bulk Filer also has additional remittance methods (bulk ACH debit entries and bulk ETA entries).

.09 Electronic tax application (ETA) transaction. An “ETA transaction” (also referred to as “Same-Day Payment”) is a transfer of funds through the ETA subsystem of EFTPS that receives, processes, and transmits an FTD or FTP and the related tax payment information for SameDay Payments through Fedwire value transfers, Fedwire non-value transactions,

.07 If a taxpayer is required by regulations to make an FTD by EFTPS, a Filer may not use a paper FTD coupon (Form 8109, Federal Tax Deposit Coupon) or the magnetic tape FTD program (described in Rev. Proc. 89–48, 1989–2 C.B. 599) to make an FTD for the taxpayer. If a taxpayer is a voluntary participant in EFTPS (that is, a participant not required by regulations to make an FTD by EFTPS) and the Filer is unable, for any reason, to make an FTD using EFTPS or chooses not to use EFTPS to make an FTD, the Filer may make a timely FTD for the taxpayer by using a paper FTD coupon, or the magnetic tape FTD program if authorized by the taxpayer.

.08 EFTPS does not change the computation of tax liability, interest or penalties, or FTD or FTP due dates.