The IRS has recently enhanced its Direct Pay service, enabling businesses to securely make tax payments, including Federal Tax Deposits (FTDs), without the need to enroll in the Electronic Federal Tax Payment System (EFTPS). This improvement offers a more streamlined option for business taxpayers to pay directly from their bank accounts without prior registration.
What Taxes Can Be Paid with Direct Pay?
Businesses can now use Direct Pay to handle payments for a variety of forms, including:
Form 720: Quarterly Federal Excise Tax Return
Form 940: Employer’s Annual Federal Unemployment (FUTA) Tax Return
Form 941: Employer’s Quarterly Federal Tax Return
Form 943: Employer’s Annual Federal Tax Return for Agricultural Employees
Form 945: Annual Return of Withheld Federal Income Tax
Form 990-PF: Return of Private Foundation
Form 990-T: Exempt Organization Business Income Tax Return
Form 1042: Annual Withholding Tax Return for U.S. Source Income of Foreign Persons
Form 1065: U.S. Return of Partnership Income
Form 1120: U.S. Corporation Income Tax Return
Key Benefits and Limitations
The Direct Pay service is convenient and eliminates the extra step of enrollment, but there are some restrictions to keep in mind:
A maximum of five payments can be made in a 24-hour period.
Single payments are capped at $10 million.
A common form, Form 1041, is not included.
For businesses needing to make larger payments or higher volumes, EFTPS or same-day wire transfers remain the best options.
This update is part of the IRS’s ongoing effort to simplify tax compliance and provide flexible solutions for taxpayers. Business owners should evaluate whether Direct Pay aligns with their payment needs while keeping limitations in mind.
Note: This article is intended solely for informational purposes and should not be interpreted as specific tax, accounting, or legal advice for any individual or organization. The legal statutes and authorities mentioned herein may change, and we are not responsible for updating this document to reflect such changes. For advice tailored to your specific circumstances, please consult a qualified tax professional who can consider the relevant laws and facts applicable to your situation.
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