What is an International ACH Transaction (IAT)?
Pursuant to the National Automated Clearing House Association (NACHA) rules, an IAT is an ACH Debit or ACH Credit payment funded by a financial institution or agency outside of the territorial jurisdiction of the U.S.
How do I know if my payment is an IAT?
The payment is an IAT if it is specifically funded with money from a financial institution outside of the United States. To help make the determination, consider the following questions:
- Is your business located outside of the United States?
- Is your business a subsidiary of a multi-national company?
- Does your business have foreign subsidiaries?
- Is the tax payment being made with funds transferred into your domestic bank account from a financial agency located outside of the United States?
A “no” answer to all four questions suggests your payment is most likely not an IAT.
A “yes” answer to any of the first three questions would be an indicator that the payment might be an IAT. However, the determining factor of whether the payment is an IAT is the source of the funding for the payment (question 4). If the payment is specifically funded, dollar for dollar, by an international financial institution or agency outside the United States then the payment is an IAT. If you are unsure, ask your bank for assistance.
Where can I find additional information about IATs?
National Automated Clearing House Association (NACHA): www.nacha.org/IAT_Industry_Information/
The Federation of Tax Administrators: www.taxadmin.org/
My tax payment is internationally funded. Can I initiate an ACH Debit method payment through the Paperless Filing & Payment System?
Yes, if the payment is for a state return or local return with state-administered localities only.
No, if the payment is for a local return that includes a self-administered locality; the IAT payment must then be initiated via the ACH Credit Method. To make an ACH Credit Method payment you must contact your bank.
I received a message on the confirmation page that because I indicated that my payment is funded internationally I must initiate an ACH Credit payment through my bank to pay the amount due. Has the return been filed?
Yes, if your confirmation number begins with an "N".
Am I required to make an electronic payment?
Payments that are $750 or greater are required to be made electronically through an Electronic Funds Transfer (EFT) method (Section 41-1-20(b)(2)(a), Code of Alabama 1975, as amended).
Except for withholding taxes and non-state administered local taxes, you may choose to pay a tax liability that is less than $750 by check.
How do I make an ACH Credit payment?
You must contact your bank to initiate the ACH Credit payment. Your bank should be able to answer your questions and handle the payment. However, for state-administered taxes you may call the Department of Revenue's EFT hotline at 1-800-322-4106 (and choose option number 7); for non-state administered local taxes, you should contact the specific locality.
Do the IAT rules apply to both the E-File\E-Pay application and the Make a Payment, EPay only, application?
Yes. The e-file\e-pay application, as well as the EPay only application, requires that you provide the following information once you indicate that your payment is internationally funded:
Additional Fields for IATs made via Bulk File/Upload Option
If Payment Method = E (ACH Debit), then IAT Funding Source is a required field for that record.
IAT Funding Source must be N or Y.
N = Payment is not funded from outside of the U.S.
Y = Payment is funded from outside of the U.S.
If IAT = Y, then the following additional fields are required (along with the IAT Funding Source field): Address, City, State and Zip Code (allowance for Zip+4).
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NOTE:
- If Payment Method does not = E, A, S, or P (ACH Debit), then IAT Funding Source is not a required field for that record.
- If record includes a self-administered locality and the payment will be internationally funded, Payment Method must = F and payment must be initiated via ACH Credit method.
- If the record includes only state-administered localities, Payment Method cannot = F.