Beginning January 1, 2017, employers with 10 or more employees will be required to electronically submit employment tax returns, wage reports, and payroll tax deposits to the Employment Development Department (EDD).
This requirement will expand to all employers beginning January 1, 2018.
Unemployment Insurance
AB 1245 (Cooley; D-Rancho Cordova, Statutes of 2015) requires electronic reporting for unemployment insurance (UI) reports submitted to the EDD. It also requires employers to remit contributions for UI taxes by electronic funds transfer.
Any employer required under existing law to electronically submit wage reports and/or electronic funds transfer to the EDD will remain subject to those requirements. EDD has FAQs on the e-file and e-pay mandate for employers.
The EDD encourages employers to enroll now in e-Services for Business so they can start reporting online before this mandate begins.
For more information about the e-file and e-pay mandate, please visit: www.edd.ca.gov/EfileMandate.
Benefits
Benefits of electronic filing and payments, according to EDD:
• Increases data accuracy.
• Protects data through encryption, which is safer and more secure than paper forms.
• Reduces paper and mailing costs.
• Eliminates lost mail.
• Faster processing of returns and payments.
e-Services for Business
Employers can use e-Services for Business to comply with the e-file and e-pay mandate. e-Services for Business is a fast, easy, and secure way to manage employer payroll tax accounts online. With e-Services for Business, employers can:
• Register for an employer payroll tax account number.
• File returns and reports.
• Make payroll tax deposits and pay other liabilities.
• View and update account information.
• And more.
Waiver
This mandate contains a waiver provision for employers who are unable to electronically submit employment tax returns, wage reports, and payroll tax deposits.
The EDD began accepting waiver requests from employers in July. To request a waiver, employers must complete and submit the E-file and E-pay Mandate Waiver Request (DE 1245W).
Here are the ways to obtain a DE 1245W:
• Download the DE 1245W from the EDD website at www.edd.ca.gov.
• Contact the Taxpayer Assistance Center at (888) 745-3886.
• Visit an Employment Tax Office.
Waiver requests can be submitted by fax to (916) 255-1181 or by mail to: Employment Development Department, Document and Information Management Center, P.O. Box 989779, West Sacramento, CA 95798-9779
Employers will be notified by mail if their waiver is approved or denied. An approved waiver will be valid for one year. Upon the expiration of the approval period, an employer must start to electronically file and pay, or submit a new waiver request to avoid a noncompliance penalty.
Penalties
Penalties will be incurred for noncompliance with this mandate. To avoid the penalties, enroll in e-Services for Business.
