FTB imposing penalties for failure to pay electronically
The FTB has begun assessing penalties on certain taxpayers who fail to make tax payments electronically. Affected taxpayers are those who, since January 1, 2009, have incurred either a total California tax liability greater than $80,000 or any individual estimated tax or extension payment more than $20,000.
The law has been in effect since 2009 but for the past two years the FTB has not assessed any penalties, giving taxpayers time to understand and comply with the new rules. The penalty for failing to make a payment electronically is 1% of the payment amount, which can result in substantial penalties for taxpayers with large liabilities or payments.
Most affected taxpayers would have received a notice from the FTB stating they were subject to the new requirements, but not all taxpayers have received one and failure to be notified by the FTB does not preclude taxpayers from the new rule.
Relief may be granted by the FTB for taxpayers only affected by one-time events such as large gains from the sale of a home or other property and the tax due was not representative of their typical tax liability. Form FTB 4107 must be filed with the FTB in order to be granted relief from the mandatory EFT requirement. Until relief is granted, taxpayers must continue to make payments electronically.
Payments may be made electronically using the FTB’s Web Pay system online at www.ftb.ca.gov/online/webpay, via Electronic Funds Withdrawal through LMGW’s tax preparation software, or via Phone or Credit Card. Signing up for Web Pay with the FTB is easy and fast, and is the recommended method for making electronic payments.
As always, if you have any questions please contact your LMGW advisor.
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