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Franchise Tax Board

Mandatory e-pay for Individuals

Mandatory e-pay law

On September 30, 2008, Governor Schwarzenegger signed Assembly Bill 1389, adding Section 19011.5 to the California Revenue and Taxation Code. This new law requires individuals to remit all future payments electronically once they:

  • Make an estimated tax or extension payment (by check or electronic method) over $20,000 for a taxable year beginning on or after January 1, 2009; OR
  • File an original return with a tax liability over $80,000 for a taxable year beginning on or after January 1, 2009.

Fiduciaries, estates, and trusts are not required to make payments electronically, regardless of the amount owed.

Group nonresident/composite return filers may be required to make their payments electronically if they meet the mandatory e-pay requirements. We provide detailed instructions so group nonresident/composite filers can pay electronically using Web Pay.

Payments covered by the law

If you make a payment or file a return meeting the mandatory requirement, we will send you an FTB 4106 MEO, Mandatory e-pay Participation Notice, advising you that all future payments must be remitted electronically. NOTE: If you do not receive notification from FTB, you are still required to remit payments electronically once you meet either of the above thresholds.

Some tax preparation software may also remind you to e-pay. If your tax preparation software generates paper Form 540-ES vouchers when you meet the mandatory e-pay threshold, you must still pay electronically.

Once you meet the mandatory e-pay threshold, you are required to make all subsequent payments electronically, regardless of the amount, type, or taxable year. For example: You make your first quarter estimated tax payment of $25,000 on 4/15/09 by paper check. Any payment made after that (for example, a bill payment from a previous year or your second quarter estimated tax payment) must be made electronically.

Mandatory e-pay penalty

When you are required to make electronic payments but pay by other means, we can assess a penalty equal to 1 percent of the amount paid, unless your failure to pay electronically was for reasonable cause and not willful neglect.

Effective January 1, 2010: Since passage of the Mandatory e-Pay law for Individuals, compliance by taxpayers and their representatives has steadily increased. Therefore, in 2010, we will again not assess the Mandatory e-pay penalty. We will continue to focus our efforts on education and outreach so that taxpayers and their representatives can implement processes and procedures to comply with the law. We will continue to monitor compliance levels to determine the appropriate time to begin implementation of the penalty provision of the statute.

Electronic payment methods

Make your tax payment using one of the following methods:

** Not available for Group Nonresident Return/Composite Filers

You may only send tax payments due to the Franchise Tax Board electronically using one of the methods above. If you owe tax to other agencies that require an electronic payment, you must make those payments directly to them.

NOTE: Making a payment using your bank's online bill payment system is not an electronic payment. Your bank mails a paper check to FTB which does not meet the requirement to pay electronically.

e-file and e-pay

While you must make your tax payments electronically if you meet the e-pay criteria, you are not required to e-file your tax return. We encourage you to e-file if you prepare your own return, but we do not require it.

California law requires tax practitioners who prepare more than 100 California individual income tax returns annually and prepare one or more using tax preparation software to e-file all personal income tax returns. If you use a tax preparer that prepares more than 100 tax returns using software, we require the tax preparer to file your tax return electronically.

Waiving the mandatory e-pay requirement

You can request a waiver from mandatory e-pay if one or more of the following is true:

  • You have not made an estimated tax or extension payment in excess of $20,000 during the current or previous income year; OR
  • Your total tax liability reported for the previous income year did not exceed $80,000; OR
  • The amount you paid is not representative of your total tax liability.

You must complete and submit form FTB 4107, Mandatory e-pay Election to Discontinue or Waiver Request. We will review your waiver request and notify you in writing when we approve or deny your request.

If we grant a waiver and you subsequently meet the mandatory e-pay requirements, you must resume making your payments using an electronic method.

Advantages of electronic payment methods

Even if you are not required to make electronic payments, you can still take advantage of paying your personal income taxes (balance due, extension payment, estimated tax payment, or tax bill) online.

  • e-file and schedule your tax payment for April 15.
  • Ensure we receive your payments on time.
  • Subscribe to receive an email reminder to remit your quarterly estimate payments.
  • Schedule your estimate payments for the entire year at one time.
  • Save the cost of mailing your return and payments to us.

Contact us

If you have questions about e-pay or making your tax payment, call us at 800.852.5711.