Legislation has been enacted that requires California employers to file all income tax withholding returns and reports electronically and remit all payments of withheld income taxes to the Employment Development Department (EDD) by electronic funds transfer (EFT). The requirement is phased in as follows: effective January 1, 2017, it applies to employers with 10 or more employees; and effective January 1, 2018, it applies to all employers. An employer may request a waiver from the electronic filing requirements. The EDD may grant a waiver if the employer establishes to the satisfaction of the director that there is a lack of automation, a severe economic hardship, a current exemption from filing electronically for federal purposes, or other good cause. An approved waiver will be valid for one year or longer, at the discretion of the director. An employer that is required to file a quarterly return electronically and without good cause fails to file electronically will be subject to a penalty of $50, in addition to any other penalties that may apply. However, prior to January 1, 2019, any employer required to file a quarterly return electronically that files a timely return by means that are not electronic will not be subject to the penalty. An employer required to remit withheld income taxes by EFT may also request a waiver of that requirement. Prior to January 1, 2017, employers are required to remit withheld income taxes by EFT only if their cumulative average payment for deposit periods in the 12-month period ending June 30 of the prior year was $20,000 or more. (Ch. 222 (A.B. 1245), Laws 2015, approved August 17, 2015, effective January 1, 2016, and applicable as noted.)
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