Tax Deposits

[Earl]

Banks frequently will not accept tax deposits if the check is drawn on an account not maintained at that bank. I have been having clients mail tax deposits to the Federal Reserve, with details letter and 8109 coupon. Lately, a couple of checks have come back saying "Submit to IRS." What are others having clients do?

[Guest mo]

I have had this problem when the account is with a mutual fund family who is not the trustee. I was able to resolve it in only two ways. One was to have the mutual fund family wire-transfer the withheld taxes to the bank. They don't seem to be as picky about that. The other was to have the fund family make the check payable to the plan sponsor, have the sponsor transfer the funds to the plan account and then remit the withheld taxes. What a pain.

[Earl]

thanks, mo. I have had similar exper with the pay to sponsor option. Too much work.

There has to be some place that you can just pay/send your taxes. It can't be this difficult.

(or can it?)

[Guest wendycatherine]

I called the IRS yesterday (11/13/01) and asked whether the employer or trust EIN should be used on the 8109 coupon/945/1099R. The agent said that either was acceptable per Announcement 84-40. (This announcement has been amended to update references to forms only.) He added that an EIN which has not been used for 18 months (this happens with small plans frequently) would "fall off the radar screen" and the agent checking the deposit would either (1) look into it and figure it out or (2) contact the entity holding the plan assets and notify it that the number was bad, causing the entity to start back-up withholding of 30%!