What is EFTPS and do I have to use it?

EFTPS (Electronic Federal Tax Payment System) is the IRS's free online system for making federal tax deposits. Most employers are required to use it. Since 2011, virtually all employers must deposit federal payroll taxes electronically. If you have employees and owe federal payroll taxes (Social Security, Medicare, federal income tax withholding), you must use EFTPS or have a payroll processor make deposits on your behalf.

How do I enroll in EFTPS?

Go to eftps.gov and click Enrollment. You will need your Employer Identification Number (EIN), your bank account and routing number, and your business address as it appears on your IRS filings. After submitting the online form, the IRS mails a PIN to your business address within 5 to 7 business days. Once you receive the PIN, log back into eftps.gov, enter the PIN, create a password, and your account is active. New businesses should enroll immediately after receiving their EIN -- do not wait until a payment is due.

What is the difference between a monthly and semi-weekly depositor?

Monthly depositors had $50,000 or less in payroll tax liability during the IRS lookback period (the 12 months ending June 30 of the prior year). They deposit by the 15th of the following month. Semi-weekly depositors had more than $50,000 in liability and must deposit within 3 business days after each payday. New employers always start as monthly depositors for the first calendar year.

What federal taxes do I pay through EFTPS?

You pay all federal payroll taxes through EFTPS: employee federal income tax withholding, employee and employer Social Security (6.2% each), employee and employer Medicare (1.45% each), plus the 0.9% Additional Medicare Tax withholding for employees over the income threshold. EFTPS is also used for FUTA (federal unemployment tax, Form 940), corporate income tax deposits, and other federal tax types.

What happens if I miss an EFTPS deposit deadline?

The IRS assesses a failure-to-deposit penalty that scales with how late the deposit is: 2% if 1 to 5 days late, 5% if 6 to 15 days late, 10% if more than 15 days late, and 15% if the IRS issues a notice demanding payment. These penalties apply per deposit period, so a single missed deposit can result in a significant penalty. The IRS does provide a first-time penalty abatement program for employers with a clean deposit history.

Can my payroll software handle EFTPS deposits for me?

Yes. Payroll software like Gusto makes federal tax deposits directly on your behalf through EFTPS. When you run payroll, Gusto calculates the correct deposit amounts, schedules payments, and ensures they hit on time. This eliminates the risk of missed deadlines and deposit calculation errors. Even if a third party makes deposits for you, you remain legally responsible if a deposit is missed, so using reputable payroll software matters.

EFTPS Guide for Tennessee Employers: Enrollment, Deadlines & How to Pay

The IRS does not just want your payroll taxes — it wants them on time. EFTPS (Electronic Federal Tax Payment System) is the mandatory online system for making federal tax deposits, and missing a deadline by even a single day triggers penalties. As a Tennessee employer, you have federal deposits via EFTPS. This guide explains exactly how EFTPS works so you never pay a late-deposit penalty.

What Is EFTPS?

EFTPS stands for Electronic Federal Tax Payment System. It is a free, IRS-operated online portal at eftps.gov that allows businesses and individuals to pay virtually all types of federal taxes electronically. For Tennessee employers, EFTPS is the required channel for making federal payroll tax deposits — there is no paper check alternative for most businesses.

Federal payroll taxes you deposit through EFTPS include:

Federal income tax withholding from employee wages
Social Security tax — 6.2% from the employee + 6.2% employer share
Medicare tax — 1.45% from the employee + 1.45% employer share
Additional Medicare Tax withholding — 0.9% for employees earning above the threshold
FUTA (federal unemployment tax) — Form 940 annual deposits

EFTPS is also used for corporate income tax deposits and other business federal taxes, making it a single hub for nearly all federal tax payments your business makes.

How to Enroll in EFTPS

Enrollment is free and takes about 10 minutes online. Here is the step-by-step process:

Go to eftps.gov and click Enrollment.
Select Business (not Individual).
Enter your Employer Identification Number (EIN), business name, and address as it appears on IRS filings.
Enter your bank account and routing number for direct debit.
Submit the form. The IRS mails a PIN to your registered business address within 5–7 business days.
When the PIN arrives, return to eftps.gov, enter the PIN, and create a password.
Your account is now active and you can make payments.

New employer tip: Enroll in EFTPS immediately after receiving your EIN — do not wait until a deposit is due. The PIN mailing takes up to a week, and your first federal deposit may be due within days of your first payroll.

Monthly vs. Semi-Weekly Depositors

The IRS assigns one of two deposit schedules based on your payroll tax liability history. Your schedule for the entire calendar year is set in advance — you cannot choose it:

Schedule	Lookback Liability	When to Deposit
Monthly	$50,000 or less	By the 15th of the following month
Semi-weekly	More than $50,000	Within 3 business days after payday
New employers	N/A (first year)	Monthly for the first calendar year

Semi-weekly due dates in detail: If payday falls on Wednesday, Thursday, or Friday, the deposit is due by the following Wednesday. If payday falls on Saturday, Sunday, Monday, or Tuesday, the deposit is due by the following Friday.

The IRS Lookback Period

Your deposit schedule is based on the lookback period: the total Form 941 tax liability you reported during the 12-month period ending June 30 of the prior year. For 2026, that is July 1, 2024 – June 30, 2025.

Add up line 12 of Form 941 for each quarter in that window:

Q3 2024 (July – September 2024)
Q4 2024 (October – December 2024)
Q1 2025 (January – March 2025)
Q2 2025 (April – June 2025)

Total liability ≤ $50,000 → monthly depositor. Total liability > $50,000 → semi-weekly depositor. Your schedule is locked for all of 2026 regardless of how large or small individual payrolls are throughout the year.

The $100,000 Next-Day Deposit Rule

There is one rule that overrides your assigned schedule: if your accumulated undeposited tax liability reaches $100,000 on any single day, you must deposit it by the next business day regardless of whether you are a monthly or semi-weekly depositor. After making a next-day deposit, semi-weekly depositors remain semi-weekly for the rest of the year. Monthly depositors are automatically converted to semi-weekly status for the remainder of the current year and all of the next year.

Practical note: The $100,000 rule typically only applies to employers with large payrolls. If you are a monthly depositor and your entire quarterly payroll tax liability is well below $100,000, you will never hit this threshold in a single day.

How to Make a Payment in EFTPS

Log in at eftps.gov with your EIN and password.
Click Make a Payment.
Select the tax form (941 for payroll, 940 for FUTA, etc.).
Select the tax period (the quarter or year the deposit applies to).
Enter the payment amount.
Select the payment date. Payments must be scheduled at least one business day before the due date — same-day scheduling is not available.
Confirm and submit. You will receive a confirmation number; save it.

You can also make payments by phone at 1-800-555-4477 (business) or via the EFTPS batch provider system if you are using payroll software that integrates directly.

Penalties for Late EFTPS Deposits

The IRS failure-to-deposit penalty scales with how late the deposit is:

Days Late	Penalty Rate
1–5 days	2%
6–15 days	5%
More than 15 days	10%
After IRS notice	15%

These penalties apply per deposit period, so a single missed payday deposit can generate a meaningful penalty. The IRS also charges interest on top of the penalty. However, the IRS offers a First Time Penalty Abatement (FTA) program — if you have a clean compliance history, you may be able to get the first penalty waived by calling the IRS and requesting abatement.

Tennessee Has No State Income Tax Withholding

Tennessee does not impose a state income tax on wages, so there is no state withholding deposit requirement for your employees. Your only withholding obligation is federal — handled entirely through EFTPS. You still have state unemployment insurance (SUI) contributions due to Tennessee Department of Revenue (TDOR) on a quarterly basis, but no income tax withholding portal to manage.

Let Payroll Software Handle EFTPS for You

Gusto automatically calculates your payroll taxes and makes federal deposits on time — every time. No manual EFTPS entries, no penalty risk. It handles Form 941 quarterly filings and year-end W-2s too.

Try Gusto Free →

Most Tennessee small business owners who run payroll themselves start out logging into EFTPS manually each month or each pay period. This works until it doesn’t — a busy week, a miscalculated deposit amount, a payment scheduled a day late. The penalties add up fast.

Payroll software like Gusto handles the entire deposit workflow automatically: it calculates the tax owed after each payroll run, schedules the EFTPS payment for the correct due date, and keeps your deposit schedule in sync with the lookback period. You get confirmation of every deposit and can audit your deposit history at any time.