* See Institute memorandum to Accounting/Treasurers Members No. 29-94, Tax Members No. 41-94 and Transfer Agent
Advisory Committee No. 41-94.
December 28, 1994
TO: ACCOUNTING/TREASURERS MEMBERS No. 46-94
TAX MEMBERS No. 53-94
TRANSFER AGENT ADVISORY COMMITTEE No. 51-94
RE: IRS MODIFIES RULES FOR DEPOSITING TAXES ELECTRONICALLY
______________________________________________________________________________
As we previously informed you, in July the IRS issued regulations and a Revenue Procedure
implementing legislation requiring that withheld taxes generally be deposited via electronic fund transfer
("EFT").* TAXLINK, the current system for processing electronic tax deposits, originally required
taxpayers to provide notice the day before a deposit is to be made of the amount to be deposited. Many
mutual funds process each day's transactions and determine the amount of backup and nonresident alien
withholding late in the evening, and deposit the withheld amount the next day. Thus, they typically
cannot provide the prior day notice of the amount of such taxes to be deposited. The Institute called
this problem to the attention of the IRS.
The Institute is pleased to report that the attached Revenue Procedure implements the Institute's
suggestion to modify the TAXLINK system effectively to eliminate the prior day notification
requirement for taxpayers required to deposit taxes using EFTs.
We will keep you informed of developments.
Peter J. Cinquegrani
Assistant Counsel - Tax
Attachment