Requirements for Paying Federal Excise Tax by Electronic Fund Transfer
Alcohol and Tobacco Excise taxpayers who are liable during any calendar year for a gross amount (tax due prior to decreasing adjustments) of $5 million or more in excise taxes must pay such taxes during the following year by Electronic Fund Transfer (EFT). This includes taxes imposed on distilled spirits, wines, or beer, or on tobacco products and cigarette papers and tubes. This requirement does not apply to taxpayers who are only liable for firearms and ammunition excise taxes, although they may voluntarily pay by EFT.
The term "taxpayer" includes a controlled group of business entities as defined in Title 28, United States Code, Sections 5061(e)(3) and 5703(b)(3). Examples of this type of business structure include, but are not limited to: parent-subsidiary controlled groups; brother-sister controlled groups, and combined groups. Fifty-one (51) percent stock ownership in a corporation need not be direct but may be acquired through an option to buy stock, attribution from partnerships, corporations, or estates and by family holdings. Therefore, if, in any calendar year, the combined liability of the controlled group is $5 million or more, then, during the following calendar year, each member of the controlled group is required to pay applicable excise taxes by EFT.
Any taxpayer who is required to make tax payments by EFT may not use cash, check or money order to make such payments. Doing so will subject the taxpayer to the failure to make deposit penalty imposed by 26 U.S.C. 6656.
The $5 million threshold applies separately to the tax on distilled spirits products, wine products and beer products. However it does apply to a combined tax liability on tobacco products and cigarette papers and tubes.
When a taxpayer who is not already making tax payments by EFT, reaches the $5 million threshold, the Chief, National Revenue Center, must be notified, in writing, of that fact. The notice will constitute an agreement to make tax payments by EFT.
The written notification, due on or before January 10 of the year in which the taxpayer is required to begin using EFT and should identify each of the taxpayer's premises that are required to make tax payments by EFT. Each location should be identified by name (as it appears on the tax returns), registry or plant number, plant address, and employer identification number. Taxpayers already using EFT are not required to notify the Chief, National Revenue Center of their continued use of EFT in succeeding years.
Additional information about the requirement to pay excise taxes by EFT and about preparing Fedwire messages for payments made in connection with TTB tax returns should be directed to the Director, National Revenue Center at 5l3-684-3334 or 1-877-882-3277.