Main Menu
Facebook Pinterest Youtube

EFT

Child Support Payments & EFT

by

The Office of Child Support Enforcement published a guide for employers to begin sending child support payments electronically. According to the guide:

All states and territories accept child support payments at their State Disbursement Unit (SDU) by Electronic Funds Transfer (EFT)/Electronic Data Interchange (EDI), the primary method of sending payments electronically. The EDI portion of the transmission includes identifying information so the payment can be properly credited to the payor’s case(s). SDUs centralize the collection and disbursement of all child support payments withheld by employers as well as other types of payments. Using EFT/EDI is well worth the initial effort. Employers that switch from sending paper checks to electronic payments will enjoy lower costs, fewer errors, and faster processing.

Sending child support payments electronically will save an employer time and money

  • Eliminates the cost of printing paper checks and supporting documents
  • Eliminates the cost of postage and delays due to lost or misdirected mail
  • Reduces check handling and processing costs
  • Reduces data entry errors
  • Gets child support payments to custodial parents faster

Getting Started with EFT/EDI

There are several ways to send a child support payment electronically:

  • By using your own payroll software to send Automated Clearing House (ACH) credit payments (similar to direct deposit) through the Federal Reserve’s banking system with EFT/EDI, using the standard child support addendum segment
  • Through a state’s web-based payment service—contact the state child support agency where you send payments for details
  • By using a payroll service provider that is already sending child support payments electronically
  • By using your bank’s online bill-paying serviceThree Steps to Implement

Step 1: Determine whether your payroll/accounting system supports electronic payments for child support.  If it does not, you may want to explore these options:

  • In-house information technology staff may be able to make programming changes so that you can produce electronic payments for child support, including the EDI DED (Deduction) child support addendum record that child support agencies need to identify the payments.
  • Your payroll/accounting software developer may have an enhancement that supports electronic payments for child support. Contact your user’s group or software representative.
  • Your bank may have a software package that will enable you to produce the file formats necessary for electronic payments. Contact your bank and ask for someone in Cash Management, Treasury Management, or Treasury Services.

Step 2: Contact the appropriate child support agency’s SDU.

  • This is not always the child support agency or SDU where you are located. It is the agency or SDU in the state that issued the underlying child support order or where you currently send funds.
  • Find out the EFT/EDI start-up procedures for the child support agency where you send funds. Do not attempt to transmit child support payments electronically without this information.

Step 3: Conduct the EFT/EDI start-up procedures for each of the child support agencies you contacted in Step 2.  These procedures will typically include:

  • An exchange of basic banking information (routing codes, account numbers), Federal Employer Identification Number (FEIN), and locator code information with the child support agency.
  • A reconciliation between child support agency records and employer records of names, Social Security numbers, and case identification numbers so that each employee’s withholdings are properly credited.
  • A transmission of an initial test file, or pre-note, to ensure that the ACH records are formatted and transmitted properly.

Where to go for more information

There are standard record specifications for child support payments.  NACHA (National Automated Clearing House Association) publishes the User Guide for Electronic Child Support Payments (PDF)visit disclaimer page to provide SDUs, employers, and their financial institutions with current formats, definitions, and implementation recommendations to remit child support payments and payment information electronically through the ACH network using current conventions and standards.

 

EFT, ACH and EDI are Different and It Matters

by

In payroll we tend to use the terms EFT, ACH and EDI interchangeably.  But in actual practice they are quite different.  To help explain these important differences the National Automated Clearing House Association or NACHA has provided some guidance on their April 29, 2019 blog, written by Rober Unger.   It is helpful to payroll professionals to understand these terms and use them correctly.  I found this blog extremely helpful and I hope you do to.

California Enacting Electronic Filing Requirement for All Employers

by

The state legislature has passed AB 1245, a bill that requires California employers of 10 or more employees to submit quarterly payroll tax returns and pay the associated payroll taxes electronically over the California Employment Development Department website starting in 2017. The bill also requires all employers to file and pay electronically effective January 1, 2018. The bill awaits the governor signature and he is expected to sign it.

Today is the last day to receive updates through this blog.  Starting on Monday, August 3rd, the blog will be devoted to discussing current payroll issues and questions.

To continue receiving our payroll-centric news updates, subscriber to our news service, The Payroll Advisor, for only $65 per year.

 

WV Imposing Failure to Pay by EFT Penalties

by

Per a West Virginia State Tax Department website notice, taxpayers required to pay by electronic funds transfer (EFT) will be subject to a 3% civil penalty applied to any payment received on or after March 1, 2015, if the payment is not made by electronic funds transfer (EFT) and a waiver to pay electronically has not been obtained.

SC Implements New EFT Program

by

My sources are telling me that on March 30, 2015, the South Carolina Department of Revenue (SCDOR) will release a new Electronic Funds Transfer (EFT) Program. Taxpayers are being notified by mail of accounts that are impacted by the change. The mailing includes a welcome letter and a separate PIN Notification letter. The EFT process will continue to require the submission of a D128: Application for Electronic Funds Transfer. With the new program, there will be a new web address and contact phone number. However, current EFT Program users should continue using the current process until March 30, 2015. New Contact Information as of March 30, 2015 Web Address for Tax Payments: www.govone.com/tpp/southcarolina Phone Number for Tax Payments: 1-800-834-7733.