E-file and E-pay Mandate for Employers

Assembly Bill 1245

Assembly Bill (AB) 1245 requires all employers, including out of state employers, to submit their employment tax returns, wage reports, and payroll tax deposits electronically. Employer representatives filing and paying for an employer must also file and pay electronically. e-Services for Business is the fast, easy, and secure way to manage your employer payroll tax account online.

e-Services for Business

Use e-Services for Business to comply with the e-file and e-pay mandate. You can manage your employer payroll tax account, and:

• Register, close, or re-open a payroll tax account.
• File, adjust, and print tax returns and wage reports.
• Make payments.
• Protest Unemployment Insurance (UI) benefit charges or UI rates.
• Authorize a power of attorney.
• Report changes to your business.
• View notices and letters.

Required Forms and Penalties for Non-Compliance

The E-file and E-pay Mandate for Employers requires you to electronically submit the following returns, reports, and payments:

Penalties based on the type of return, report, or payment.

Type	Forms	Penalty
Tax Returns	DE 9 – Quarterly Contribution Return and Report of Wages DE 3D – Quarterly Contribution Return DE 3HW – Employer of Household Worker(s) Annual Payroll Tax Return	$50 per return
Wage Reports	DE 9C – Quarterly Contribution Return and Report of Wages (Continuation) DE 3BHW – Employer of Household Worker(s) Quarterly Report of Wages and Withholdings	$20 per wage item
Payments	DE 88 – Payroll Tax Deposit	15% of amount due

You will be charged penalties for non-compliance per sections 1112(b), 1112.1, and 1114(b) of the California Unemployment Insurance Code. You can use e-Services for Business to meet the requirements of the mandate and avoid penalties.

Note: Noncompliance penalties will be charged even if filing a paper tax return to report no wages were paid. If you are no longer paying wages, you must close your employer payroll tax account. Once your account is closed, you are not required to file a tax return or wage report for periods after the closure date.

Waiver

The E-file and E-pay mandate has a waiver provision if you are unable to submit your employment tax returns, wage reports, and payroll tax deposits electronically.

To request a waiver, you must complete and submit the E-file and E-pay Mandate Waiver Request (DE 1245W) (PDF). If you can’t download and print this form, you can contact the Taxpayer Assistance Center at 1-888-745-3886 or visit an Employment Tax Office.

For instructions on how to complete the E-file and E-pay Mandate Waiver Request, refer to page 2 of the DE 1245W.

Fax waiver requests to 1-916-255-1181 or mail them to:

Employment Development Department
Document and Information Management Center
PO Box 989779
West Sacramento, CA 95798-9779

Note: Waiver requests will only be accepted by mail or fax.

You will be notified by mail if your waiver is approved or denied. An approved waiver is valid for one year only, starting with the quarer your request was received, and will not be accepted for previous quarters. After the 12-month waiver ends, you must file and pay electronically, or submit a new waiver request to avoid non-compliance penalties. If you receive a denial letter, it is final and cannot be appealed. Employers will receive employment tax returns, wage reports, and payroll tax deposit coupons by mail only if they have an approved E-file and E-pay Mandate Waiver Request (DE 1245W).

Other Electronic Filing and Payment Options

The following options also meet the E-file and E-pay mandate:

• Federal/State Employment Taxes (FSET) - Bulk Transmissions
• Electronic Funds Transfer (EFT)
  • State Data Collector.
  • Automated Clearing House (ACH) Credit.
• Payroll Tax Deposit Payments: Credit and Debit Card
  • Credit card payments are completed through ACI Payments, Inc. and are subject to a convenience fee of 2.75 percent for payments made by credit card and 1.75 percent for payments made by debit card, with a $1.00 minimum. The convenience fee is not paid to the EDD.
• Make a Payment - Employment Taxes

Additional Resources

• Information Sheet: E-file and E-pay Mandate for Employers (DE 231EM) (PDF)