Using the New NACHA-Approved Third Party Payment Addenda FTA Tech Conference Atlanta, Georgia. Donna Muccilli, FTA Efile Manager

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1 Using the New NACHA-Approved Third Party Payment Addenda 2013 FTA Tech Conference Atlanta, Georgia Donna Muccilli, FTA Efile Manager

2 It All Started With the TXP FTA s first payment standard States needed taxpayer data in the electronic payment in order to match the payment to the return. Taxpayers and service providers needed a standardized payment format across all states. TXP addenda format was developed and is now widely utilized. Recognized by NACHA, the national bank clearing house association. Approved by ANSI ASC X12 for financial EDI.

3 Third Party Payment Initiative Credit Colorado DOR for TPP Initiative CODOR had an issue tons of paper checks for garnishments, that they wished to convert to electronic payments - Universal issue for all states. CODOR needed information in the payment on both the payer (business) AND the taxpayer on whose behalf the payment was being made. CODOR came to FTA to propose a new standard: the TPP or Third Party Payment addenda format.

4 TPP Format Development Colorado created format based on TXP and DED formats. TPP contains information on both the payer and the taxpayer. Useful for garnishments, but also for some Payroll Service Providers. Presented to states for feedback and approval via FTA. TIGERS assisted in formatting and in X12 submission and approval process

5 TPP Format Approval Approved by NACHA NACHA is the governing body for the Automated Clearing House (ACH) Network, and works with stakeholders through its industry councils on ACH and other electronic payment issues. NACHA s Council for Electronic Billing and Payment includes bank, vendor, and corporate members, focused on promoting electronic billing and payment CEBP member banks approached the council about issues for originating non-federal tax payments on behalf of business customers when state tax authorities make format changes. Approved by X12 and adopted as a standard.

6 Using TPP FTA, NACHA and Industry encourage states to use TPP for garnishments and payroll tax payments Challenge: Banks are waiting on state demand, while states are waiting on bank support Find the TPP User Guide at NACHA Website: Banking%20Convention/TPP%20User%20Guide%20Revised %2007%2029%2013.pdf Communicate State's Interest in Participation with end-users and especially Financial Institutions NACHA State Tax Change Portal

7 NACHA State Tax Change Portal NACHA approached Federation of Tax Administrators and its member states. Improve the timeliness and quality of communications between states and service providers regarding format/data changes that affect ACH payments for business taxes. Provide more lead-time for service providers to implement changes; and Reduce the risk of misdirected payments and associated fees/penalties.

8 NACHA State Tax Change Portal Website Site launched June 17, 2010 Pages designed for banks/payment processors, businesses, state tax authorities 450+ have signed up to receive notices Banks/credit unions, payroll companies, money services, tax authorities, payment providers, and large companies 20+ states use portal

9 NACHA State Tax Change Portal Listserv function for posting and transmitting appropriate tax change notices Receiver enrollment, Sender submission Types of notifications include: new/retiring business tax, payment/ach format changes, change in payment service offering Change of taxing authority s banking information (note: actual bank account information will not be transmitted - just a notice that information has changed and receiver should contact agency for details).

10 State Change Notice Verification States submit notifications through an online form (in the Tax Authorities section of the website). When a notification is submitted, an (autogenerated with tracking ID) is sent to the FTA with a request to verify the submission. The Change Notification is held in suspense (i.e., not distributed) until it is approved. FTA verifies the source. Once verified, FTA sends an to NACHA and the notification is released by NACHA via to the entire list of receivers.

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14 State Change Notice Verification The FTA will verify the source. Once verified, the FTA will send an to NACHA and the notification will be released by NACHA via to the entire list of receivers.

15 Other epayment Communications

16 Other epayment Resources Federation of Tax Administrators Jonathan Lyon, Senior Manager Tax Technology and Standards Donna Muccilli, Efile Manager

17 Questions/Comments