California E-file and E-pay Mandate for Employers

Effective January 1, 2017 state law requires employers with 10 or more employees to electronically submit employment tax returns, wage reports and payroll tax deposits to the Employment Development Department (EDD). For all other employers, this mandate takes effect January 1, 2018.

In order to comply with this new requirement employers must create an employment tax account with the Employment Development Department by visiting: http://www.edd.ca.gov/Payroll_Taxes/e-Services_for_Business.htm and selecting “Enroll”.

By creating a payroll account with the EDD you will be able to submit returns and make payroll tax deposits and other liability payments. You will also be able to view, adjust, and print returns and reports previously submitted. Other benefits include: increase of data accuracy, data protection through encryption, reduction of paper and mailing costs and faster processing of returns and payments.

A waiver (DE 1245W) can be filed for those employers that are not able to comply. The EDD must approve the waiver in order for the employer to avoid penalties.

Penalties for failing to comply are as follows: Tax Returns (DE 9, DE 3HW, DE 3D) $50 per tax return, Wage Reports (DE 9C, DE 3BHW) $20 per wage item and Payroll Tax Deposits (DE 88) 15% of amount due.

For a printable information sheet about this new mandate visit: http://www.edd.ca.gov/pdf_pub_ctr/de231em.pdf