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SUMMARY:
This rule describes the requirements for tax and other payments by electronic
funds transfer. The provisions of this rule apply to payments of taxes imposed
by Title 36 M.R.S.A. as well as to payments processed by Maine Revenue Services
for other agencies of Maine State Government pursuant to agreements with those
agencies. Authority to collect taxes electronically is provided in 36 M.R.S.A.
§193. An electronic funds transfer allowed by Maine Revenue Services is
considered a "return" for purposes of state tax law.
This rule does not prohibit the collection of taxes or
other payments processed by Maine Revenue Services by credit card or other
payment mechanism, with the exception of mandatory EFT participation required
by section .02 below.
OUTLINE OF CONTENTS:
.01 Definitions
.02 Mandatory
EFT participation
.03 Voluntary
EFT participation
.04 Registration
.05 Payments
.06 Tax returns
.07 Request
for waiver from mandatory participation
.08 Prenotifications
and tests
.09 CTX
files
.10 Emergencies
.11 Problem
resolution
.12 Interest
and
penalties
.13 Taxpayer
and
service provider responsibilities
.01 DEFINITIONS
As
used in this rule, the following terms have the following meanings:
A. "ACH" (Automated
Clearing House) means a central
distribution and settlement point for the electronic clearing of debits and
credits between financial institutions. An automated clearing house may be a
federal reserve bank or any organization that operates as a processing agent
for ACH transactions between financial institutions pursuant to an operating
agreement with NACHA.
B. "ACH
credit method" means an
electronic funds transfer using the ACH network that is initiated by a taxpayer
through its financial institution to credit (deposit) a payment amount to a
designated State of Maine bank account and debit (withdraw) that amount from
the taxpayer's bank account for a payment amount.
C. "ACH
debit method" means an
electronic funds transfer using the ACH network that is initiated by Maine
Revenue Services, upon taxpayer instruction, to debit a taxpayer's designated
bank account for a payment amount and credit that amount to a designated State
of Maine bank account.
D. "ACH
teledebit method" means ACH debit method transfer that is initiated by
Maine Revenue Services upon taxpayer instruction received via a telephone call
made to the MRS ACH debit payment system.
E. "ACH network" means the electronic funds transfer system governed
by the rule of NACHA.
F. "Addendum record" means an ACH record type that carries the
supplemental data needed to completely identify an electronic payment to the
receiving financial institution and the payee.
G. "CCD+"
(Cash Concentration or Disbursement Plus Addendum) means a standard ACH transaction format that is
accompanied by one addendum record.
H. "CIE+"
(Customer Initiated Entry) means a standard ACH transaction format. A CIE entry
is a credit entry that is initiated by or on behalf of the holder of a consumer
account to affect a transfer of funds to the deposit account of a receiver. It
is accompanied by one addenda record in the CCD+. CIE+ entries were created for electronic
funds transfer for consumer bill payments.
J. "EFT" (Electronic
Funds Transfer) means a standard
ACH funds transfer to credit or debit a bank account or wire transfer. EFT does not include payments by check, draft
or similar paper instrument.
K. "Intra-bank
transfer" means the
transfer of funds from a depositor's account to a State of Maine bank account
within the same financial institution.
L. "Lookback
period" means the period of
12 or fewer months reviewed by MRS to determine whether a taxpayer’s reported
tax liability has met or exceeded the threshold for mandatory EFT payment
established for that tax. The lookback period ends on June 30 of the year
before the year in which mandatory EFT payment becomes due.
M. “MRS” (Maine
Revenue Services) means the Maine Bureau of Revenue Services.
N. "NACHA" (North
American Clearing House Association) means the national regulatory body that establishes the standards,
rules and procedures governing the ACH Network.
O. "Prenotification" means a zero dollar entry that may be sent through the
ACH at least six (6) business days prior to live entries affecting an account
at a financial institution.
P. "RTN " (Routing Transit Number) means the 9-digit
identification number assigned to a financial institution by the American
Banking Association.
Q. "Service provider" means a person that performs accounting tax
preparation, or other similar services, and remits tax payments on
behalf of its clients. Examples of service providers are payroll processors as
that term is defined in Title 10 chapter 222; accountants; third-party
withholders such as banks; and bill-paying services.
R. "Settlement date" means
the date an electronic payment is deposited in a bank account designated by the
State of
S. "Standard
EFT payment methods" means
the ACH credit method or the ACH debit method of electronic funds transfer.
T. "Taxpayer identification
number" means the account
number assigned by MRS to a person's tax account.
U. “TXP" (Tax Payment convention) means the standard format
approved by the Banker's EDI Council of NACHA that identifies tax payments in
the addendum record portion of a CCD+ transaction.
V. “Wire transfer” means the same-day transfer of funds from a
depositor's account to a State of
.02 MANDATORY
EFT PARTICIPATION
A.
GENERALLY. The term “tax types” as used in this subsection does
not include taxes excluded from mandatory participation in the EFT program
under subsection C below.
1. Effective
January 1, 2008, any person with a combined tax liability to the State of
$100,000 or more for all tax types during the most recent lookback periods
ending during the prior calendar year is required to remit all
2. Effective
January 1, 2009, any person with a combined tax liability to the State of
$50,000 or more for all tax types during the most recent lookback periods
ending during the prior calendar year is required to remit all
3. Effective
January 1, 2010, any person with a combined tax liability to the State of
$25,000 or more for all tax types during the most recent lookback periods
ending during the prior calendar year is required to remit all
4.
Effective January 1, 2011, any person with a combined tax liability to the
State of $18,000 or more for all tax types during the most recent lookback
periods ending during the prior calendar year is required to remit all
5. Effective
January 1, 2012, any person with a combined tax liability to the State of
$16,000 or more for all tax types during the most recent lookback periods
ending during the prior calendar year is required to remit all
6. Effective
January 1, 2013, any person with a combined tax liability to the State of
$14,000 or more for all tax types during the most recent lookback periods
ending during the prior calendar year is required to remit all
7. Effective
January 1, 2014, any person with a combined tax liability to the State of $12,000
or more for all tax types during the most recent lookback periods ending during
the prior calendar year is required to remit all
8. Effective
January 1, 2015, any person with a combined tax liability to the State of
$10,000 or more for all tax types during the most recent lookback periods
ending during the prior calendar year is required to remit all
B. NOTIFICATION BY MRS. MRS will periodically review the payment
histories of taxpayers, employing the lookback period in order to determine
which taxpayers are required or will become required to make payments via EFT. When MRS determines that a taxpayer is or will
become liable for making payments electronically, the taxpayer will be notified
and provided with the necessary registration forms or, in the case of internet
filing, the internet address, to establish an EFT account with MRS. The
taxpayer has 30 days after such notification to complete and return
registration materials. After EFT
registration, the taxpayer will be provided with the information listed in
section .04, paragraph F of this rule. The mandated taxpayer has 60 days or the
first applicable due date, whichever is later, after receipt of the information
listed in section .04, paragraph F of this rule to begin remittance of taxes by
EFT.
C. EXCLUDED TAXES. The EFT program is intended for all taxes collected by
MRS except the following tax types:
1. Property taxes imposed by Title 36,
Part 2
2. Commercial Forestry excise taxes
imposed by Title 36, Part 4
D. SERVICE
PROVIDERS. Service providers
(other than payroll processing companies) that remit taxes on behalf of a
client must remit electronically for that client using a standard EFT payment
method if the client is mandated to pay the tax electronically. Payroll
processing companies must remit electronically for all clients regardless of
whether those individual clients are mandated. A payroll processing company may
request a waiver from this requirement from the State Tax Assessor for good
cause. Service providers must use the ACH credit method under most
circumstances.
E. TAXPAYERS
ALREADY REMITTING BY EFT.
1. When a
taxpayer is notified of mandatory EFT status and is already remitting tax
electronically on a voluntary basis, no further action is required.
2. When a
taxpayer is notified of mandatory EFT status and is not currently remitting all
taxes electronically, but is remitting one or more tax types electronically,
ACH credit method taxpayers must request general and tax-specific information
and addenda layout(s) for the mandated tax(es). An additional EFT application
is not required. ACH Teledebit method
taxpayers must send an additional EFT application for all other tax types not
already set up.
3. A taxpayer
who was required to remit tax electronically must continue to remit taxes
electronically even if the taxpayer falls below the thresholds in .02(A),
unless that taxpayer requests a waiver from participation.
.03 VOLUNTARY
EFT PARTICIPATION
Taxpayers who are remitting electronically on a
voluntary basis may continue to do so. Discontinuation of voluntary EFT status
is at the discretion of the State Tax Assessor.
.04 REGISTRATION
A. GENERALLY;
ONLY ONE EFT PAYMENT METHOD ALLOWED PER TAXPAYER. All participants in the electronic funds transfer
program are required to register as specified by the State Tax Assessor. Registration
is not required if an ACH debit payment is initiated on an electronically filed
return. A taxpayer must choose one EFT
payment method, either the ACH credit method or the ACH debit method; no
taxpayer may use both methods unless the criteria in paragraph E below are met.
EFT applicants must have an existing tax account with MRS prior to EFT
registration for any tax account requiring registration. Tax registration is
accomplished by completing the Application for Tax Registration and submitting
it to the Central Registration Unit.
B. ACH
CREDIT METHOD PROGRAM. For
taxpayers, including service providers, choosing the ACH credit method, one EFT
application may be used even if payments will be made by one person for
multiple business entities. All applicants must be able to transmit funds using
CCD+ and TXP format. The State Tax Assessor will consider the feasibility of
accepting ACH transactions in the CIE+ and other ACH formats if requested by a
taxpayer. Any service provider remitting for 25 or more separate taxpayer accounts
may request to make payments using the ACH credit method and CTX format.
When there is a change in ownership of a taxpayer, a
new registration application must be submitted. Taxpayers are not required to
complete additional EFT applications to add new tax accounts to the ACH credit
method program. Accounts may be added by notifying MRS of the taxpayer name,
account name, type of tax, account number and original applicant name.
The ACH credit method requires the taxpayer to have a
relationship with a financial institution that supports credit method
transactions for its customers. Payments to the State through the financial
institution are usually initiated by:
1. Sending
a computer file in a specified format to the bank MRS will provide ACH file specifications
upon request; or
2. Using
a service of the bank or another vendor by telephone or computer/modem input.
C. ACH
DEBIT METHOD PROGRAM. Registration
is not required if an ACH debit payment is initiated on an electronically filed
return sent via I-File or E-File. Taxpayers
choosing to use MRS’s EZ Pay online payment system will be required to register
through EZ Pay prior to initiating payments. For taxpayers choosing the ACH teledebit
method, a separate EFT application is required for each taxpayer. The applicant
must provide either a voided check or a letter from the bank certifying the RTN
and account number are valid. Taxpayers must notify MRS when changes occur in
banks or bank account numbers.
D. SERVICE
PROVIDERS. All service providers
must use the ACH credit method unless funds will be withdrawn directly from
client bank accounts and the funds are not held in trust by the service
provider prior to remittance to the State. Those service providers that qualify
for the ACH debit method and wish to use it must register each client
separately.
Service providers may use the ACH credit method for
all client payments and the ACH debit method for those payments that are
directly debited to clients' bank accounts.
E. USE OF
BOTH PAYMENT METHODS BY ONE TAXPAYER. Remittances by one taxpayer or service provider using both the ACH
credit method and the ACH debit method may be allowed at the discretion of the State
Tax Assessor
F. INFORMATION
PROVIDED TO APPLICANTS. After
approval by MRS, registrants will be provided with the following:
1. General
EFT program information and instructions;
2. Tax-specific
information; and
3. ACH
credit method addendum record layouts for each type of tax payment and
depository bank information, or ACH debit method data input instructions.
G. TAXPAYERS
TO NOTIFY BUREAU OF CHANGES.
Taxpayers using the ACH credit method are required to notify the EFT Unit of
any changes to the taxpayer's registration information. This includes, but is
not limited to, changes in contact person, mailing address, telephone number,
tax remittance frequency, tax account number, and establishment of a new tax
account. Taxpayers using the ACH debit method should consult debit program
instructions regarding changes in EFT registration information.
H. CHANGING
EFT PAYMENT METHODS. A change
from ACH debit method to ACH credit method may require the taxpayer or service
provider to complete a new registration application. The taxpayer must request
credit program information from MRS. Taxpayers transferring from the ACH debit method
to the ACH credit method may be removed from debit program databases at the
discretion of the State Tax Assessor.
A taxpayer request to change EFT payment methods will
not be honored by the State Tax Assessor if the taxpayer has changed methods
within the previous 12 months, absent compelling circumstances.
.05 PAYMENTS
A. GENERALLY;
DUE DATES. Tax payments made by
electronic funds transfer are due by the same date as otherwise provided by law
or regulation, except 36 MRSA § 153(1). If a due date falls on a weekend or
legal holiday the electronic funds transfer must occurs on the next
succeeding day which is not a Saturday, Sunday or legal holiday in this State.
B. ACH
CREDIT METHOD. ACH credit method
transactions must be initiated and accepted by a taxpayer's financial
institution at least one business day prior to the payment due date for the
payment to be credited to the depository bank account on the payment due date.
It is the taxpayer's responsibility to determine the transfer deadline required
by their financial institution for acceptance of ACH credit method transactions.
A service provider using the ACH credit method and
CTX must use its own name in field 3,
positions 5 through 20 of the '5', "Company/Batch Header Record" of
the ACH file. A service provider must also use its own Employer's
Identification Number in field 7, positions 40 through 54 of the '6', CTX
Corporate Entry Detail Record" of the ACH file when using the ACH credit
method and CTX format to make tax payments.
Service providers using the CTX format must transmit
separate and unique ACH files for each designated State of
C. ACH
DEBIT METHOD PROGRAM. Debit
transactions must be initiated at least one business day prior to the payment
due date.
D. VALUE
OF PAYMENT. Electronic funds
transfers, intra-bank transfers and wire transfers must be in
.06 TAX
RETURNS
Payment of taxes by electronic funds transfer eliminates the necessity
of filing forms 900ME (withholding coupon/voucher form), 1120ES (Corporate
estimate form) and other estimate, coupon or voucher forms normally required by
the State Tax Assessor. Taxpayers will be notified on a tax-specific basis,
after EFT registration, of the specific tax forms that are eliminated when
electronic payments are made. Any tax returns not identified in such
notification must continue to be filed by the normal statutory due dates.
.07 REQUEST
FOR WAIVER FROM MANDATORY EFT PARTICIPATION
A taxpayer may make a written request to MRS directed
to the EFT unit for waiver from mandatory EFT participation for good cause.
Good cause determinations will be made on a case-by-case basis. The following
will generally be considered by the State Tax Assessor to constitute good
cause:
A. The
taxpayer's bank does not participate in ACH in any form. The taxpayer must
provide a letter from its financial institution.
B. The
taxpayer's current tax liability and reporting trend shows a decline in the
amount of reported tax liability. If projected into the future, the tax
liability will not meet or exceed the applicable mandatory threshold amount.
C. The
taxpayer's tax liability meets or exceeds the applicable mandatory threshold
amount only because of uncharacteristically high tax amounts reported in 3 or
fewer months of the lookback period. However, good cause does not exist under
this paragraph in the case of a person reporting withholding tax on a quarterly
basis.
D. The
taxpayer is under the payroll administration of the federal government.
.08 PRENOTIFICATIONS AND TESTS
A. ACH
CREDIT METHOD. It is recommended
that taxpayers make an error-free prenotification transaction before commencing
the electronic transmission of funds to Maine Revenue Services. Only one prenotification
test per depository bank account is necessary if payments will be made for more
than one account. Prenotification type transactions will be for a $.01 payment
in CCD+ with addendum record information. Taxpayers are discouraged from
sending test transactions for one dollar. CCD+ depositors will be notified if
addenda errors are found in prenote transaction(s) or upon request.
B. ACH TELEDEBIT
METHOD. The Bureau recommends a successful
ACH Teledebit method prenotification transaction before taxpayers may begin
using the ACH Teledebit method.
NACHA rules state that an originating depository
financial institution must wait a minimum of six banking days following the
settlement date of a prenotification entry before transmitting the first live
dollar entry. Therefore, a taxpayer's first ACH payment may be delayed due to
the waiting period. Taxpayers are advised to take this into consideration when
initiating their first ACH payment after sending a prenotification transaction.
Remittances received from taxpayers and service providers during
prenotification testing will be posted to taxpayer accounts as tax payments.
Taxpayers should account for the payments accordingly.
.09 CTX FILES
A. GENERALLY. Any person remitting for 25 or more separate taxpayer
accounts may request to make payments using the ACH credit method and CTX
format. CTX-formatted files will be accepted only if formatted correctly. The
submitting taxpayer will be notified of the error and may discuss remedies with
the EFT Unit.
B. TESTING. A minimum of two (2) and a maximum of eight (8)
payment transactions must be sent for $.01 each. Payments must include addendum
information for valid and active taxpayer accounts and must be correctly
formatted. Transactions should include at least one payment for each separate
tax type code and State of
C. FILE
PROCESSING. MRS will perform a
validation check to confirm that the dollar amount deposited equals the sum of
dollar amounts contained in the addendum records for each tax payment. Files
that do not balance will not be processed.
.10 EMERGENCIES
If a normal ACH debit method or credit method
transaction cannot be made due to an unusual event, taxpayers must remit by
other means, including wire transfer, intra-bank transfer, or payment by check.
Taxpayers paying by wire transfer or intra-bank transfer in an emergency
situation are responsible for notifying MRS of the following information:
A. Payment
amount;
B. Settlement
date;
C. Taxpayer
name;
D. Taxpayer
identification number;
E. Tax
payment type code or payment description;
F. Reporting
period in which to post the payment; and
G. Depository
bank account number.
Credit for wire or intra-bank transfers in emergency
situations will not be given unless all of the above information is provided.
Payment by check should be accompanied by the appropriate tax return or other
document that would normally accompany the payment if paid by check or taxpayer
name, identification number, payment description, reporting period in which to
post the payment, contact person, and telephone number.
.11 PROBLEM
RESOLUTION
A. RESEARCH
SERVICES. MRS will not verify
receipt of routine EFT payments, but will assist taxpayers in resolving payment
discrepancies. MRS will also research, upon taxpayer request, whether or not a
particular payment has or has not been received. Taxpayers requesting research
must provide the following information:
1. Requester's
name if not the taxpayer;
2. Taxpayer
name and phone number;
3. Settlement
date;
4. Depository
bank account number;
5. Payment
amount; and
6. Taxpayer
identification number;
7. Tax
payment type code or payment description; and
8. If ACH
debit method, the payment confirmation number.
B. DEBIT
OR ADJUSTING ENTRIES. Generally,
debit or adjusting entries to State of
C. DUPLICATE
AND OTHER ERRONEOUS PAYMENTS.
Duplicate payments will be posted to the taxpayer's account, as will
overpayments made to a valid tax account. Payments made in error will also be
posted to that account. Other erroneous payments will be handled on a
case-by-case basis.
D. REFUND
OR CREDIT PROCEDURES. For
instructions on refund or credit procedures, remitters should contact the Tax
Division within MRS responsible for administering the particular tax in
question (i.e., Income/Estate Tax Division, Sales/Excise Tax Division, etc.).
.12 INTEREST
AND PENALTIES
A. GENERALLY;
INSUFFICIENT FUNDS. Payments
made by electronic funds transfer are subject to the interest and penalty
provisions of Title 36 M.R.S.A., including 186, 187-A and187-B. EFT deposits to a designated State of Maine
bank account that are reversed by the State's depository bank due to
insufficient funds in the originator's account are subject to the insufficient
funds penalty provided by 36 M.R.S.A section 187-B(5). When a payment is
returned for insufficient funds due to a change in financial institution or
bank account number by the taxpayer, the insufficient funds penalty will be
imposed where the taxpayer has not followed the provisions of section .04(C)
above. In circumstances where the State has changed financial institutions or
depository bank account numbers, payments returned for insufficient funds will
incur the insufficient funds penalty when the Bureau has notified the taxpayer
in writing of the change.
B. FAILURE
TO FILE ELECTRONICALLY. Title 36
M.R.S.A. provides that any taxpayer required by this rule to remit taxes by
electronic funds transfer that fails to do so is liable for a penalty of the
lesser of 5% of the tax due or $5,000. The law states that a failure to remit
electronically has occurred when:
1. Two or
more required payments in any consecutive 6-month period are either not made or
are made by the taxpayer by means other than electronic funds transfer, and the
taxpayer has been notified in writing by MRS of the noncompliance and of the
fact that the penalty may be imposed; or
2. The
taxpayer makes 2 or more required electronic payments in any consecutive
6-month period that do not comply with the specifications set forth in this rule.
C. WAIVER
OR ABATEMENT OF PENALTIES. A
taxpayer may request waiver or abatement of penalty for reasonable cause. The
request must be in made in writing within 30 days of receipt of a notice from MRS
in accordance with 36 M.R.S.A. § 151 and directed to the Tax Division
responsible for administering the tax in question. "Reasonable Cause"
is defined in 36 M.R.S.A. §187-B(7). In addition, for purposes of the EFT
program, the State Tax Assessor will generally make a finding of reasonable
cause when it appears that the taxpayer has made a good faith effort to resolve
an underpayment or late payment made electronically. In determining whether a
good faith effort had been made, the State Tax Assessor will consider:
1. In the
case of a taxpayer or service provider using the ACH credit method, whether
written documentation is provided from company or bank records substantiating
the taxpayer's belief that a timely payment was initiated;
2. In the
case of a taxpayer or service provider using the ACH debit method, whether the
person provides documentation of a payment confirmation number provided by MRS or
its service provider when a payment was initiated;
3. In a
case where the taxpayer or service provider contends that its bank has made an
error, whether written documentation substantiating a bank error is provided to
the MRS;
4. In the
case where the taxpayer or service provider contends that an ACH or other
system failure beyond the taxpayer's control occurred; and
5. Whether
remittance to satisfy the underpayment is made in a timely manner.
D. ABATEMENT
OF INTEREST. Interest abatement
will be considered on a case-by-case basis. Written request for abatement of
interest must be made within 30 days of receipt of notice by MRS in accordance
with 36 M.R.S.A. § 151. The request should be directed to the division that
issued the underpayment notice.
.13 TAXPAYER
AND SERVICE PROVIDER RESPONSIBILITIES
A. GENERALLY.
Persons remitting electronically
should maintain adequate documentation to substantiate the initiation of an
electronic funds transfer for payment of tax for all electronic funds transfer
payment methods.
B. ACH
CREDIT METHOD PROGRAM. Taxpayers
and service providers who apply to remit using the ACH credit method are
responsible for ensuring that their financial institution can support that method
for payments to the State of Maine. MRS is not responsible for instruction on
the usage and reliability of the products and services of financial
institutions or other companies, nor for fees charged by financial
institutions, service providers and others.
Taxpayers and service providers remitting by ACH credit method are also
responsible for understanding the correct usage of the software or the service
they use to remit electronically and to submit payment information contained in
the "Addenda" and other sections of an ACH file in the correct
format. The Bureau will provide ACH file layouts upon request.
C. ACH
DEBIT METHOD PROGRAM. Taxpayers
are responsible for understanding and following debit program instructions
issued by MRS. Taxpayers must maintain a record of the confirmation number or
sequence provided when an ACH debit method payment is initiated, the payment
amount, the payment initiation date, the tax reporting period, and the taxpayer
identification number related to the payment.
D. RECORDKEEPING
REQUIREMENTS. Persons remitting
electronically should maintain documentation to substantiate the initiation of
an electronic funds transfer for payment of tax for all EFT payment methods.
Mandatory recordkeeping requirements for EFT remitters are the same as stated
in 36 M.R.S.A. §135, subsection 1, which states that records pertaining to
income and estate taxes must be retained as long as required by applicable
federal law and regulation, while records pertaining to all other taxes must be
retained for a period of at least 6 years. The statute also states that the
records must be kept in such a manner as to ensure their security and
accessibility for inspection by the State Tax Assessor.
STATUTORY AUTHORITY: 36 M.R.S.A. §193.
EFFECTIVE DATE:
AMENDED:
August
23, 2010 – filing 2010-361