If your company pays more than $50,000 in annual payroll taxes, you must start paying electronically by July 1 or incur steep penalties. The IRS says about 230,000 employers nationwide are not yet prepared. You can use a commercial payroll service or one of the two deposit options offered by the IRS: 1) making deposits through your bank; or 2) debit transactions that authorize the government to take funds from your account. Not all banks are set up to process these transactions and some charge service fees of up to $200 per month. There’s no charge for the IRS debit service. To prevent big headaches, some CPAs recommend setting up a separate payroll tax account so that the IRS can’t accidentally take too much of your money.
For more information, call the IRS at (800) 555-4477.