E-Pay Penalty in California
By Trevor Genereux, Senior Manager, Tax & Business
Beginning January 1, 2011, the California Franchise Tax Board will begin to assess a penalty when a person or business required to make payments electronically uses any other method. While the policy to e-pay has been in place for some time, there historically has been no enforcement of the policy. The penalty will be equal to 1% of the amount paid unless there was reasonable cause not to pay electronically.
A taxpayer is required to make payments electronically when either:
- An estimated payment or an extension payment is made for over $20,000
- A tax return is filed with a tax liability of over $80,000
A taxpayer may remit payments electronically in one of four ways:
- Online with Web Pay at ftb.ca.gov
- An Electronic Funds Withdrawal (EFW) when e-filing a tax return
- By credit card online at www.officialpayments.com or by calling toll free 1.800.272.9829
- Use the pay-by-phone option by completing and submitting form FTB 4073, Mandatory e-pay Pay-by-Phone Authorization Agreement for Individuals, available at ftb.ca.gov
It is worth noting that fiduciaries, estates, and trusts are not required to make payments electronically, regardless of the amount owed.