NEW CALIFORNIA TAX PAYMENT RULES Some clients may be required to make their payments electronically (Mandatory e-pay) AB 1389 (enacted September 30, 2008) added Section 19011.5 to the Revenue & Taxation Code, requiring some taxpayers to make their tax payments using an electronic method (mandatory e-pay). Beginning January 1, 2009, individuals are required to remit tax payments electronically once they meet either of the following conditions: ·         Make an estimated tax or extension payment greater than $20,000 for a taxable year beginning on or after January 1, 2009; or ·         File an original return with a tax liability greater than $80,000 for a taxable year beginning on or after January 1, 2009. Once either of these conditions is met, all future payments regardless of type, amount, or tax year must be remitted electronically. Electronic payment methods include Electronic Funds Withdrawal (EFW), Web Pay, or credit card. Taxpayers required to remit payments electronically who make a payment by other means are subject to a one percent penalty of the amount paid, unless the failure to pay electronically was for reasonable cause and not willful neglect. Taxpayers whose tax thresholds fall below the mandatory e-pay amounts may request to discontinue making electronic payments. In March 2009, FTB will provide a waiver form for taxpayers to file. On December 1, the California Franchise Tax Board (FTB) sent courtesy letters to taxpayers who made an estimated tax payment in 2008 that was near or above the new mandatory e-pay threshold amount ($20,000).  The letter informed these taxpayers of the law change, and that they may meet the requirement for mandatory e-pay in 2009.  However, this letter may not have been as clear as it could have been.  To help clarify the requirements, the FTB has added a clarification message to the example courtesy letter available on our website http://www.ftb.ca.gov/forms/misc/4105MEO.pdf (the FTB will not be sending new letters to taxpayers).

IRS Required Statement: This document was not intended or written to be used, and it cannot be used by the recipient, for the purpose of avoiding penalties that may be imposed on any taxpayer.