Sales tax concerns if you sell through multiple channels
Businesses have new ways to sell today, as marketplaces such as Amazon, TikTok and the business’s...
An ACH Credit is when the taxpayer or third party provider initiates the payment through their financial institution, then their financial institution electronically transmits the payment directly to the jurisdiction. This would be similar to your personal “bill pay” through your own bank.
Benefits to ACH Credit:
Things you may need to consider when choosing ACH Credit:
In an ACH Debit transaction the taxpayer or third party provider supplies the jurisdiction with their bank account and the jurisdiction pulls the money directly from their account. Personally you may set up this type of transaction when you are paying your mortgage or utility bill at a specific time of the month.
Benefits to ACH Debit:
Things you may need to consider when choosing ACH Debit:
FEDWIRE is a real-time gross settlement system that enables participants to initiate fund transfers that are immediate, final, and irrevocable once processed. I do not recommend this type of payment unless it is urgent. The fees associated with this type of transaction can be around $25 or higher and may only be accepted in some states.
Paying with a credit card may be okay if the taxpayer is very small, but be aware that this transaction will usually have a service charge with an average of 2% of the amount being transmitted. I do not recommend this method because I feel a credit card should be used for business purchases, not to remit your taxes. I don’t consider this a “clean” transaction.
I prefer the ACH Credit process as it gives the taxpayer the most control over the payment process. There are certain jurisdictions though that require an ACH Debit payment. Regardless of the form of payment, be sure to get some type of payment confirmation in case of a later dispute.
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