E-Alert
February 23, 2011
California Mandatory E-Pay
After a two-year moratorium, the Franchise Tax Board (FTB) will begin assessing Electronic Funds Transfer (EFT) penalties on certain individuals who fail to make their California tax payments electronically. The penalty equals 1% of the amount that was not paid electronically, unless the failure was due to reasonable cause and not willful neglect.
All payments made by an individual on or after January 1, 2009, regardless of taxable year or amount, must be remitted electronically to the FTB after the individual either has:
- Made a single estimated tax or extension payment greater than $20,000 for any taxable year beginning on or after January 1, 2009; or
- Filed an original return with a tax liability greater than $80,000 for a taxable year beginning on or after January 1, 2009.
The FTB will notify taxpayers after they have made a payment or filed a return that triggers EFT. Penalties will only be waived for reasonable cause. EFT is still mandatory even if the FTB does not notify a taxpayer of their requirement to pay electronically.
Taxpayers may make their required EFT payment in one of the following ways:
- Using the FTB's Web Pay (http://www.ftb.ca.gov/online/webpay/)
- Electronic funds withdrawal (EFW) when e-filing;
- Credit card; or
- Telephone (must pre-arrange with the FTB)
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If you have any questions regarding the information in this article, or have any other issues you would like to discuss, please feel free to contact the DZH Phillips tax department at 415.781.2500 or email cpas@dzhphillips.com.
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