20250SB__059197AMD INTRODUCED 2025-02-20 AMENDED_SENATE 2025-03-26 AMENDED_ASSEMBLY 2025-07-17 2025 SB AMD Introduced by Senators Valladares and Allen (Coauthor: Senator Umberg) (Coauthor: Assembly Member Berman) LEAD_AUTHOR SENATE Valladares LEAD_AUTHOR SENATE Allen COAUTHOR SENATE Umberg COAUTHOR ASSEMBLY Berman

An act to amend

Section 19011.5 of the Revenue and Taxation Code, relating to taxation. taxation Taxation: electronic payments: penalties. Existing law requires that any payments required to be remitted to the Franchise Tax Board pursuant to specified laws be remitted by electronic funds transfer if specified conditions are met.

Existing law, where payment is required to be made by electronic funds transfer but is made by some other means instead, imposes a penalty equal to 10% of the amount paid, except as provided.</xhtml:p>"?> Existing law requires that any payment required to be remitted to the Franchise Tax Board by an individual pursuant to specified law be remitted electronically in the form and manner prescribed by the Franchise Tax Board if specified conditions are met.

Existing law, where payment is required to be made electronically but is made by some other means instead, imposes a penalty equal to 1% of the amount paid, except as provided. This bill would, for payments made on or after January 1, 2026, change the penalty for the above-described violation to instead be waived for the first violation. MAJORITY NO YES NO NO NO NO NO NO NO NO The people of the State of California do enact as follows:

SECTION 1. The Legislature finds and declares all of the following: (

a) It is important to promote and protect the integrity of the California tax system. (

b) It is important that California’s tax system is perceived as, and is in fact, fair to all taxpayers. (

c) It is important that violations of the Revenue and Taxation Code are subject to appropriate penalties. (

d) It is important that these penalties are commensurate with the violation or violations. <caml:Num>SEC. 2.</caml:Num><caml:ActionLine action="IS_AMENDED" xlink:href="urn:caml:codes:RTC:caml#xpointer(%2Fcaml%3ALawDoc%2Fcaml%3ACode%2Fcaml%3ALawHeading%5B%40type%3D'DIVISION'%20and%20caml%3ANum%3D'2.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'PART'%20and%20caml%3ANum%3D'10.2.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'CHAPTER'%20and%20caml%3ANum%3D'4.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'ARTICLE'%20and%20caml%3ANum%3D'1.'%5D%2Fcaml%3ALawSection%5Bcaml%3ANum%3D'19011.'%5D)" xlink:label="fractionType: LAW_SECTION" xlink:type="locator">Section of the <caml:DocName>Revenue and Taxation Code</caml:DocName> is amended to read:</caml:ActionLine><caml:Fragment><caml:LawSection id="id_2B0F52D7-1F29-4062-8DF7-D88CB01C8B18"><caml:Num>19011.</caml:Num><caml:LawSectionVersion id="id_523609B8-78E0-45A5-BC40-0AFD31AB7852"><caml:Content><xhtml:p>(a)<xhtml:span class="EnSpace"/>All payments required under this part, regardless of the taxable year to which the payments apply shall be remitted to the Franchise Tax Board by electronic funds transfer pursuant to Division 11 (commencing with

Section 11101) of the Commercial Code, once any of the following conditions are met:</xhtml:p><xhtml:p>(1)<xhtml:span class="EnSpace"/>With respect to any corporation, any installment payment of estimated tax made pursuant to

Section or the payment made pursuant to

Section with regard to an extension of time to file exceeds fifty thousand dollars ($50,000) in any taxable year beginning on or after January 1, 1991, or exceeds twenty thousand dollars ($20,000) in any taxable year beginning on or after January 1, 1995.</xhtml:p><xhtml:p>(2)<xhtml:span class="EnSpace"/>With respect to any corporation, the total tax liability exceeds two hundred thousand dollars ($200,000) in any taxable year beginning on or after January 1, 1991, or exceeds eighty thousand dollars ($80,000) in any taxable year beginning on or after January 1, 1995.

For purposes of this section, total tax liability shall be the total tax liability as shown on the original return, after any adjustment made pursuant to

Section 19051.</xhtml:p><xhtml:p>(3)<xhtml:span class="EnSpace"/>A taxpayer submits a request to the Franchise Tax Board and is granted permission to make electronic funds transfers.</xhtml:p><xhtml:p>(b)<xhtml:span class="EnSpace"/>A taxpayer required to remit payments to the Franchise Tax Board by electronic funds transfer may elect to discontinue making payments where the threshold requirements set forth in paragraphs (1) and (2) of subdivision (

a) were not met for the preceding taxable year. The election shall be made in a form and manner prescribed by the Franchise Tax Board.</xhtml:p><xhtml:p>(c)<xhtml:span class="EnSpace"/>Any taxpayer required to remit payment by electronic funds transfer pursuant to this

section who makes payment by other means shall pay a penalty of one hundred dollars ($100) for an initial failure and five hundred dollars ($500) for each subsequent failure, unless it is shown that the failure to make payment as required was for reasonable cause and was not the result of willful neglect.</xhtml:p><xhtml:p>(d)<xhtml:span class="EnSpace"/>Any taxpayer required to remit payments by electronic funds transfer pursuant to this

section may request a waiver of those requirements from the Franchise Tax Board. The Franchise Tax Board may grant a waiver only if it determines that the particular amounts paid in excess of the threshold amounts established in this

section were not representative of the taxpayer’s tax liability. If a taxpayer is granted a waiver, subsequent remittances by electronic funds transfer shall be required only on those terms set forth in the waiver.</xhtml:p><xhtml:p>(e)<xhtml:span class="EnSpace"/>The Franchise Tax Board shall accept remittances by electronic funds transfer pursuant to this

section no later than January 1, 1993. Electronic funds transfer procedures, in addition to those described in subdivision (f), shall be as prescribed by the Franchise Tax Board. Payment is deemed complete on the date the electronic funds transfer is initiated, if settlement to the state’s demand account occurs on or before the banking day following the date the transfer is initiated.

If settlement to the state’s demand account does not occur on or before the banking day following the date the transfer is initiated, payment is deemed to occur on the date settlement occurs.</xhtml:p><xhtml:p>(f)<xhtml:span class="EnSpace"/>For purposes of this section:</xhtml:p><xhtml:p>(1)<xhtml:span class="EnSpace"/>“Electronic funds transfer” means any transfer of funds, other than a transaction originated by check, draft, or similar paper instrument, that is initiated through an electronic terminal, telephonic instrument, or computer or magnetic tape, so as to order, instruct, or authorize a financial institution to debit or credit an account.

Electronic funds transfer shall be accomplished by an automated clearinghouse debit, automated clearinghouse credit, a Federal Reserve Wire Transfer (Fedwire), or by an international funds transfer.</xhtml:p><xhtml:p>(2)<xhtml:span class="EnSpace"/>“Automated clearinghouse” means any federal reserve bank, or an organization established by agreement with the National Automated Clearing House Association, that operates as a clearinghouse for transmitting or receiving entries between banks or bank accounts and that authorizes an electronic transfer of funds between those banks or bank accounts.</xhtml:p><xhtml:p>(3)<xhtml:span class="EnSpace"/>“Automated clearinghouse debit” means a transaction in which any department of the state, through its designated depository bank, originates an automated clearinghouse transaction debiting the taxpayer’s bank account and crediting the state’s bank account for the amount of tax.

Banking costs incurred for the automated clearinghouse debit transaction by the taxpayer shall be paid by the state.</xhtml:p><xhtml:p>(4)<xhtml:span class="EnSpace"/>“Automated clearinghouse credit” means an automated clearinghouse transaction in which the taxpayer, through its own bank, originates an entry crediting the state’s bank account and debiting its own bank account.

Banking costs incurred by the state for the automated clearinghouse credit transaction may be charged to the taxpayer.</xhtml:p><xhtml:p>(5)<xhtml:span class="EnSpace"/>“Fedwire” means any transaction originated by the taxpayer and utilizing the national electronic payment system to transfer funds through federal reserve banks, pursuant to which the taxpayer debits its own bank account and credits the state’s bank account.

Electronic funds transfers may be made by Fedwire only if prior approval is obtained from the Franchise Tax Board and the taxpayer is unable, for reasonable cause, to make payments pursuant to paragraph (3) or (4).

Banking costs charged to the taxpayer and to the state may be charged to the taxpayer.</xhtml:p><xhtml:p>(6)<xhtml:span class="EnSpace"/>“International funds transfer” means any transaction originated by the taxpayer and utilizing the international electronic payment system to transfer funds, pursuant to which the taxpayer debits its own bank account and credits the state’s bank account.</xhtml:p><xhtml:p>(7)<xhtml:span class="EnSpace"/>In determining whether a payment or total tax liability exceeds the amounts established in subdivision (a), the income of all taxpayers whose income derived from, or attributable to, sources within this state is required to be determined by a combined report shall be aggregated and the total aggregate amount shall be considered to be the income of a single taxpayer for purposes of determining the payment or total tax liability of a single taxpayer.</xhtml:p></caml:Content></caml:LawSectionVersion></caml:LawSection></caml:Fragment></caml:BillSection>"?>

SEC.

Section 19011.5 of the Revenue and Taxation Code is amended to read: 19011.5. (

a) All payments required by an individual under this part, regardless of the taxable year to which the payments apply, made on or after January 1, 2009, shall be electronically remitted to the Franchise Tax Board in the form and manner prescribed by the Franchise Tax Board, once any of the following conditions are met by an individual:

(1) Any installment payment of estimated tax made pursuant to this

part in excess of twenty thousand dollars ($20,000), or any payment made pursuant to

Section with regard to an extension of time to file that exceeds twenty thousand dollars ($20,000), for any taxable year beginning on or after January 1, 2009.

(2) The total tax liability exceeds eighty thousand dollars ($80,000) in any taxable year beginning on or after January 1, 2009. For purposes of this section, total tax liability shall be the total tax liability as shown on the original return, after any adjustment made pursuant to

Section 19051. (

b) A taxpayer required to electronically remit payment to the Franchise Tax Board pursuant to this

section may elect to discontinue making payments electronically where the threshold requirements set forth in paragraphs (1) and (2) of subdivision (

a) were not met for the preceding taxable year. The election shall be made in a form and manner prescribed by the Franchise Tax Board. (

c) Any taxpayer required to electronically remit payment pursuant to this

section who makes payment by other means shall pay a penalty of percent of the amount paid, unless it is shown that the failure to make payment as required was for reasonable cause and was not the result of willful neglect. (

d) Notwithstanding subdivision (c), for payments made on or after January 1, 2026, the Franchise Tax Board shall waive the penalty for a taxpayer’s first violation. (d)</xhtml:p>"?> (

e) Any taxpayer required to electronically remit payments pursuant to this

section may request a waiver of those requirements from the Franchise Tax Board. The Franchise Tax Board may grant a waiver only if it determines that the particular amounts paid in excess of the threshold amounts established in this

section were not representative of the taxpayer’s tax liability. If the Franchise Tax Board grants a waiver to a taxpayer, the waiver shall be in writing, and subsequent electronic remittances shall be required only on those terms set forth in the written waiver. (e)</xhtml:p>"?> (

f) For purposes of this section,

Chapter 3.5 (commencing with

Section 11340) of Part of Division of Title of the Government Code shall not apply to any standard, criterion, procedure, determination, rule, notice, or guideline established or issued by the Franchise Tax Board pursuant to subdivision (a). (f)</xhtml:p>"?> (

g) For purposes of this section, both of the following shall apply: (1) “Electronically remit” means to send payment through use of any of the electronic payment applications provided by the Franchise Tax Board, including, but not limited to, a pay by phone option, when made available by the Franchise Tax Board. (2) “Pay by phone” means a method that allows a taxpayer to authorize a transfer of funds from a financial institution using telephonic technology.