Beginning Sunday, 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). Employees with fewer than 10 employees will be subject to this requirement beginning January 1, 2018.
This mandate also applies to out-of-state employers who report payroll taxes to the EDD.
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
Even if you process payroll through a payroll company or accounting firm, you should contact your employer representative/payroll agent to ensure they are electronically submitting your employment tax returns, wage reports, and payroll tax deposits to the EDD. The EDD strongly encourages enrollment in “e-Services for Business” to monitor your payroll tax account online.
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|
To ease the transition from paper forms and coupon booklets to electronic reporting, the EDD is offering employers online tutorials and technical assistance. There is a waiver provision for employers who are unable to electronically submit employment tax returns, wage reports and/or payroll tax deposits. You can visit the EDD’s FAQs to learn more.
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.
About the Author
The Grady Firm, P.C. attorneys specialize in helping businesses grow and succeed through
employment, business, and immigration law advising for clients in California. They help perform personnel audits, train employers on employment law compliance, provide on-demand legal analysis for hiring and firing questions, and provide leadership and sexual harassment training in English and Spanish.
To learn more about ensuring your business is compliant with state and local laws, schedule a complimentary 15-minute consultation with The Grady Firm’s attorneys; call +1 (323) 450-9010; or fill out a Contact Request Form.
*This article is for informational purposes only, and does not constitute legal advice or create an attorney-client relationship. This article does not make any guarantees as to the outcome of a particular matter, as each matter has its own set of circumstances and must be evaluated individually by a licensed attorney.