Mandatory e-pay for Individuals
Mandatory e-pay law
On September 30, 2008, Assembly Bill 1389 was signed, 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 4.15.13 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.
On January 1, 2011: FTB started assessing the penalty provision of the statute. Prior to this date we did not assess the penalty to allow taxpayers and their representative's time to implement processes and procedures to comply with the law.
Electronic payment methods
Make your tax payment using one of the following methods:
- Pay online with Web Pay.
- Request an Electronic Funds Withdrawal (EFW) on your e-file return.**
- Pay by credit card.**
- Use the pay-by-phone option.**
** Not available for Group Nonresident/Composite Return 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.
Waiving the mandatory e-pay requirement
You can request a general or permanent waiver from mandatory e-pay requirement. To request the waiver 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.
You can request a general 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 previous income year; or your tax liability reported for the previous income year did not exceed $80,000;
- The amount you paid is not representative of your tax liability.
If we grant a waiver and you subsequently meet the mandatory e-pay requirements, you must resume making your payments using an electronic method.
You can request a permanent waiver from mandatory e-pay if you have a permanent physical or mental impairment that prevents you from using a computer. You must have your physician complete and sign PAGE 3 of FTB 4107. The signed affidavit must be attached to FTB 4107 when it is submitted.
When you file FTB 4107, to request a permanent impairment waiver you can check a box on the form and have us review your account for possible waiver of a previously imposed mandatory e-pay penalty if all the following exist:
- You received a mandatory e-pay penalty for payments made before receiving approval of your permanent physical or mental impairment request.
- The date on the physician’s affidavit of permanent physical or mental impairment pre-dates the assessment of the penalty.
- The statute of limitations for filing a claim for refund is still open.
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 tax (estimated tax, bill, return, or extension) payments 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 payments to us.
If you have questions about e-pay or making your tax payment, call us at 800.852.5711.
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