May 2009 - Reminder – Some of your clients may have met the new mandatory e-pay requirement when they made their first quarter estimate payment for the 2009 taxable year. However, We realize that some taxpayers and practitioners may need additional time to implement practices and procedures to comply with the requirement. Therefore, during the 2009 calendar year, taxpayers subject to the mandate who remit their payment by check instead of electronically will not be assessed an “e-pay penalty” (one percent of the amount paid).
Senate Bill 1389 (signed by the governor on September 30, 2008) added Section 19011.5 to the Revenue and Taxation Code, requiring some taxpayers to make their tax payments using an electronic method.
Beginning January 1, 2009, personal income taxpayers whose tax liability is greater than $80,000, or who make a single estimated tax or extension payment that exceeds $20,000 for taxable years beginning on or after January 1, 2009, meet the condition for mandatory electronic payments. Once either of these conditions is met, all subsequent payments regardless of type, amount, or tax year must be remitted electronically. Electronic payment methods include Electronic Funds Withdrawal (EFW), Web Pay, or by credit card. We will also offer a Pay-by-Phone option in July 2009.
There is a provision for a one percent penalty of the amount paid unless the failure to pay electronically was for reasonable cause and not willful neglect. However, as stated above, we realize that some taxpayer and representatives will need added time to comply with the mandatory e-pay requirement. Taxpayers subject to the requirement who do not remit their payments electronically will not be assessed the e-pay penalty during the 2009 calendar year. We will start assessing the e-pay penalty on January 1, 2010.
Taxpayers may elect to discontinue making payments electronically if they have not made an estimated tax or extension payment in excess of $20,000 during the current or previous taxable year, or their total tax liability for the current or previous taxable year did not exceed $80,000. Taxpayers may also request a waiver from the mandatory e-pay requirement if the amounts paid were not representative of their total tax liability. To request a waiver, use FTB Form 4107, Mandatory e-pay Election to Discontinue or Waiver Request, available on our website.
Check our website for more information. Go to ftb.ca.gov and search for mandatory e-pay.