FAQs – E-file and E-pay Mandate (Assembly Bill 1245)
Assembly Bill (AB) 1245 requires all employers to electronically submit employment tax returns, wage reports, and payroll tax deposits to the Employment Development Department (EDD). Depending on the number of employees, the requirement is phased in beginning:
- January 1, 2017, employers with 10 or more employees will be required to electronically file and pay.
- January 1, 2018, all remaining employers will be required to electronically file and pay.
For more information, see Information Sheet: E-file and E-pay Mandate for Employers (DE 231EM).
We encourage you to enroll now in e-Services for Business so you can start reporting online before this mandate begins.
Note: Any employer required under existing law to electronically submit wage reports and/or electronic funds transfer to the EDD prior to January 1, 2017, will remain subject to those requirements.
- I have fewer than 10 employees; why did I receive a letter stating that I am subject to the e-file and e-pay mandate?
If you reported 10 or more employees in any quarter of 2016, you were notified to electronically file and pay your employment tax returns, wage reports, and payroll tax deposits beginning January 1, 2017.
- What employment tax returns, wage reports, and payments must be electronically submitted under this mandate?
The e-file and e-pay mandate requires the following returns, reports, and payments to be electronically submitted:
- DE 9 - Quarterly Contribution Return and Report of Wages
- DE 9C - Quarterly Contribution Return and Report of Wages (Continuation)
- DE 3BHW - Employer of Household Worker(s) Quarterly Report of Wages and Withholdings
- DE 3HW - Employer of Household Worker(s) Annual Payroll Tax Return
- DE 3D - Quarterly Contribution Return
- DE 88 - Payroll Tax Deposit
The recommended method is e-Services for Business. It is an online service for managing your employment tax account and does not require specialized software. e-Services for Business is fast, easy, and secure!
Other e-file and e-pay options:
- If I have an employer representative/payroll agent that prepares my employment tax returns, wage reports, and/or payroll tax deposits, are they required to electronically file and pay?
Yes. You should contact your employer representative/payroll agent to make sure they are electronically submitting your employment tax returns, wage reports, and payroll tax deposits to the EDD. Although you have an employer representative/payroll agent, the EDD strongly encourages you to enroll in e-Services for Business to monitor your payroll tax account online.
- Will the EDD continue to automatically mail employment tax returns, wage reports, and payroll tax deposit coupon booklets after the mandate goes into effect?
No. Employers subject to the mandate will no longer be automatically mailed the payroll tax deposit coupon booklets, tax returns, and wage reports unless an E-file and E-pay Mandate Waiver Request (DE 1245W) is approved.
Yes. Out-of-state employers who report payroll taxes to the EDD are subject to this mandate.
Failure to comply with this mandate will result in the following penalties which are in addition to any other penalties that apply:
|Tax Returns (DE 9, DE 3HW, DE 3D)||$50 per tax return|
|Wage Reports (DE 9C, DE 3BHW)||$20 per wage item|
|Payroll Tax Deposits (DE 88)||15% of amount due|
Take advantage of e-Services for Business! Enroll now to avoid these penalties!
- Am I required to electronically submit employment tax returns, wage reports, or payroll tax deposits that were due for periods prior to the effective date of this mandate?
No. If the employment tax return, wage report, or payroll tax deposit is submitted for a period that is prior to the effective date of this mandate, penalties will not be charged as the law is not retroactive. However, other late filing penalties apply as usual.
Yes. There is a waiver provision for employers who are unable to electronically submit employment tax returns, wage reports and/or payroll tax deposits.
To request a one year waiver, employers must 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.
- Contact the Taxpayer Assistance Center at 888-745-3886.
- Visit the nearest Employment Tax Office.
You can either mail or fax the completed waiver request:
Employment Development Department
Document and Information Management Center
PO Box 989779
West Sacramento, CA 95798-9779
No. Waiver requests will only be accepted by mail or fax.
An approved waiver is valid for one year beginning with the quarter of the request date.
No. A waiver request will not be approved for a period longer than one year. At the end of an approved period, if another waiver is needed, a new waiver request must be submitted.
No. An approved waiver is only valid starting with the quarter of your request. It will not be effective for prior quarters.
You will receive by mail an approval or denial letter from the EDD.
No. Waiver request determinations have no appeal provisions.
No. Employers will not be notified when their approved waiver has expired. The approval letter sent to the employer will indicate the approval period. Please keep the waiver response letter for your records. Upon the expiration of the approval period, an employer must start to electronically file and pay, or submit a new waiver request to avoid any non-compliance penalties.