Franchise Tax Board

Check Casher Business Reporting Requirements

In September 2007, California enacted Assembly Bill 1747 into law, which amended Civil Code Section 1789.30 and Revenue and Taxation Code (R&TC) Section 18631.7 to exclude payroll, government, and one-party checks from the check casher information reporting requirement. The new reporting requirements are effective January 1, 2008. To accommodate businesses, the excluded items can be omitted from the 2007 reporting requirement.

Check cashers are no longer required to report transactions involving:

  • Payroll checks - a check for wages subject to withholding pursuant to Unemployment Insurance Code Section 13020, and treated as a payroll check pursuant to Civil Code Section 1789.35 for fee-setting purposes.
  • Government checks - a check issued by a federal, state, or local governmental entity and treated as a government check pursuant to Civil Code Section 1789.35 for fee-setting purposes.
  • One-party checks - a check drawn upon the maker's account and presented by the maker.

No other changes were made to the information reporting requirements.

General information

Information reporting requirements for check casher businesses operating in California went into effect on January 1, 2006. Assembly Bill 139, enacted on July 19, 2005, amended Civil Code Section 1789.30 and added R&TC Section 18631.7 to the law. The purpose of this web page is to assist check cashers in meeting these requirements. Here you will find guidance on how to comply with the new law and instructions on how to get assistance. Be sure to return to this web page for updates. We are aware that for some businesses affected by the new law, information reporting is a new and unfamiliar requirement. We plan to implement the penalty provisions in a reasonable manner, and to take into account the newness of the requirements in determining whether the check casher (as defined by the statute) has made a reasonable effort to comply with the statutory requirement.

The check casher information reporting law is one of several California initiatives to close the state’s tax gap. The tax gap is the difference between what the state’s taxpayers owe and what they voluntarily pay. Over the years, the tax gap has grown from an estimated $2 billion annually in the 1980s to an estimated $6.5 billion today. Some people (and businesses) cash their checks at businesses like yours to avoid reporting all of their income. These tax cheats cause law-abiding taxpayers to pay more taxes and they can also have a tremendous business advantage over individuals and businesses who pay their fair share because they are able to undercut the competition. Your cooperation will help California locate these tax cheats and persuade them to pay their fair share.

Who must file

If your business meets the check casher definition below, and at any time you charge a fee in excess of $2.00 to cash checks, then you are required to file information returns.

"Check casher" means a person or entity that for compensation engages, in whole or in part, in the business of cashing checks, warrants, drafts, money orders, or other commercial paper serving the same purpose (Civil Code Section 1789.31).

Exceptions:

  • This law does not apply to state and federally chartered banks, savings associations, credit unions, and industrial loan companies.
  • "Check casher" also does not include a retail seller engaged primarily in the business of selling consumer goods, including consumables, to retail buyers who cash checks or issue money orders for a minimum flat fee not exceeding two dollars ($2) as a service to its customers that is incidental to its main purpose or business (Civil Code Section 1789.31(a)).

What to report

Check cashers who cash checks in the course of their trade or business are required to file an information return with the Franchise Tax Board for either:

  • Checks totaling more than ten thousand dollars ($10,000) in one transaction.
  • Checks totaling more than ten thousand dollars ($10,000) in two or more transactions for the same person within the calendar year.

Check cashers must provide us with the following information on the affected check presenters whenever it is available:

  • Name and address.
  • Taxpayer identification number or social security number. If you are unable to provide us with the check presenter's taxpayer identification number or social security number, provide us with the identification number you used to verify the presenter's identity.
  • The amounts and dates of each transaction.

Do not report transactions involving:

  • Payroll checks - Check for wages subject to withholding pursuant to Unemployment Insurance Code Section 13020, and treated as a payroll check pursuant to Civil Code Section 1789.35 for fee-setting purposes.
  • Government checks - Check issued by a federal, state, or local governmental entity and treated as a government check pursuant to Civil Code Section 1789.35 for fee-setting purposes.
  • One-party checks - Check drawn upon the maker's account and presented by the maker.

Here are some examples of transactions involving one-party checks that you would not report:

  • Customer writes out a personal check for the exact amount, to pay for goods or services.
  • Customer writes a personal check for the purpose of paying for consumer goods or services and receiving cash in the same transaction.
  • Customers write personal checks for the purpose of withdrawing cash from their own accounts.

Businesses with multiple locations

Individuals, partnerships, or corporations that operate more than one check casher location should aggregate the data from all locations and submit a single information return through their headquarters.

When to file information returns

Annual filing is on a calendar year basis. The law requires check cashers to provide the information to us no later than 90 days after the end of the calendar year.

The filing period for reporting on transactions occurring in calendar year 2007 is January 1, 2008 through March 31, 2008.

Checks, warrants, drafts, money orders, and other commercial paper

For information reporting purposes, "checks" includes warrants, drafts, money orders, and other commercial paper (R&TC Section 18631.7). Transactions involving the purchase of money orders are not reportable.

Taxpayer identification numbers and social security numbers

You are required to provide us the check presenter's taxpayer identification number or social security number if you are able to obtain it. When a check casher fails to provide either, you can still cash their checks, depending on your policy.

Protecting information

When you receive taxpayer identification numbers or social security numbers from your customers, use the same precautions you use to protect your employees' confidential information. The California Department of Consumer Affairs' Office of Privacy Protection has guidelines for protecting social security numbers. See California Office of Privacy Protection at www.oispp.ca.gov/consumer_privacy.

How to file

Files must be submitted on CD-ROM. When formatting your files, please use FTB 1021. To accommodate those businesses that have already completed their system programming using the 2006 version of the record layout, we will accept reporting year 2007 returns formatted in either format.

To file on CD-ROM, you will need:

  • Computer resources including a computer, suitable business software, or a service bureau familiar with preparing information returns for the purpose of filing with government agencies.
  • FTB 1021 - FTB Check Casher Information Report Record Layout. This document describes how to format your information on the CD-ROM.
  • Example of how to create a Microsoft Excel file containing check casher information return transactions.
  • FTB 3606 - CD-ROM Transmittal Form.

Once you have prepared your CD-ROM, send it to:

Shipping

DATA EXCHANGE - CHECK CASHER MS L120
FRANCHISE TAX BOARD
9646 BUTTERFIELD WAY
SACRAMENTO CA 95827

U.S. Postal Service

DATA EXCHANGE - CHECK CASHER MS L120
FRANCHISE TAX BOARD
PO BOX 942840
SACRAMENTO CA 94240

When you mail your return:

  • Clearly identify all CD-ROMS as described in FTB 1021 - FTB Check Casher Information Report Record Layout.
  • Include the submission date, your business' name and sequence of each volume submitted (e.g., 1 of 2, 2 of 2, etc). If only one volume is submitted, label it 1 of 1.
  • Be sure to download FTB 3606, CD-ROM Transmittal Form, and include it with your file. Do not mail it separately.

Persons who fail to file California's check casher information reports, are subject to Sections 6721 and 6724 of the Internal Revenue Code. We are aware that for some businesses affected by the new law, information reporting is a new and unfamiliar requirement. We plan to implement the penalty provisions in a reasonable manner, and to take into account the newness of the requirements in determining whether the check casher has made a reasonable effort to comply with the statutory requirement. If you have any questions, call the Information Reporting Helpdesk at (916) 845-6304.

Waiver

If we granted you a waiver for the 2006 reporting year, we are automatically extending your waiver by one additional year, through the 2007 reporting year. If you are unable to report the required information for the 2007 reporting year and did not receive a waiver for the 2006 reporting year, you must submit to us FTB 3607, Waiver Request Form. You can download a waiver request form from this Website or call our Forms by Phone automated service. To order forms by phone:

  • Call us at (800) 338-0505.
  • Select 2 for Business Entity Information.
  • Select "To Order Forms."
  • Follow the recorded instructions and enter this 3-digit code, 820, when instructed.

Please allow 10-15 working days to receive your forms. If you live outside California, please allow 3 weeks.

Waiver period

Waiver requests for reporting year 2007 must be postmarked no later than the return due date, March 31, 2008.

Forms and Publications

  • FTB 3606 - CD-ROM Transmittal Form
  • FTB 3607 - Waiver Request Form
  • FTB 1021 - FTB Check Casher Information Report Record Layout

Where to get help

You can call our Check Casher Information Reporting helpdesk at (916) 845-6304. We are available Monday through Friday, except state holidays.

Write to us at:

CHECK CASHER INFORMATION REPORTING MS A181
FRANCHISE TAX BOARD
PO BOX 1468
SACRAMENTO CA 95812-1468

Email: CKCasherhelp@ftb.ca.gov