Bill Text: CA AB1245 | 2015-2016 | Regular Session | Chaptered
Bill Title: Unemployment insurance: electronic reporting and funds transfers.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Passed) 2015-08-17 - Chaptered by Secretary of State - Chapter 222, Statutes of 2015. [AB1245 Detail]
Download: California-2015-AB1245-Chaptered.html
BILL NUMBER: AB 1245 CHAPTERED
BILL TEXT
CHAPTER 222
FILED WITH SECRETARY OF STATE AUGUST 17, 2015
APPROVED BY GOVERNOR AUGUST 17, 2015
PASSED THE SENATE JULY 13, 2015
PASSED THE ASSEMBLY JULY 16, 2015
AMENDED IN SENATE JULY 7, 2015
AMENDED IN ASSEMBLY MAY 11, 2015
AMENDED IN ASSEMBLY APRIL 6, 2015
INTRODUCED BY Assembly Member Cooley
FEBRUARY 27, 2015
An act to amend Sections 1088, 1110, 1112, 1114, 13002, and 13021
of, and to add Section 1112.1 to, the Unemployment Insurance Code,
relating to unemployment insurance.
LEGISLATIVE COUNSEL'S DIGEST
AB 1245, Cooley. Unemployment insurance: electronic reporting and
funds transfers.
(1) Existing law provides for unemployment compensation benefits
for eligible individuals in the state who are unemployed through no
fault of their own. Existing law requires an employer, as defined, to
file a report of contributions, a quarterly return, a report of
wages paid, and an annual reconciliation return, as specified, to the
Director of Employment Development and to make contributions for
unemployment insurance premiums. Existing law provides that an
electronic funds transfer of contributions satisfies the report of
contributions filing requirements.
This bill, beginning on January 1, 2017, would require an
employer with 10 or more employees to file all reports and returns
electronically and remit all contributions for unemployment insurance
premiums by electronic funds transfer, except as provided. The bill,
beginning on January 1, 2018, would extend the application of these
electronic filing and fund transfer requirements to all employers.
The bill would authorize the granting of a waiver from these
requirements, as specified. The bill would impose a penalty of $50 on
those employers who fail to file a quarterly return electronically
without good cause, and would, until January 1, 2019, exempt certain
employers' timely nonelectronic filings from that penalty.
(2) Existing law imposes a 15% penalty on an employer who fails to
timely pay the contributions and imposes a $20 penalty for each
unreported wage item.
This bill would extend those penalties to an employer, subject to
the above-described electronic filing requirements, who fails to file
the required reports electronically and would, on and after January
1, 2017, and until January 1, 2019, exempt certain employers from
those penalties.
(3) Existing law requires employers to withhold income taxes each
calendar quarter, file a withholding report, a quarterly return, a
report of wages, and pay over the taxes required to be withheld.
This bill, beginning on January 1, 2017, would require an employer
subject to the above-described electronic filing requirements to
remit the withheld taxes by electronic funds transfer. The bill would
authorize a waiver from these requirements, as specified.
The bill would also make related conforming changes.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 1088 of the Unemployment Insurance Code is
amended to read:
1088. (a) (1) Each employer shall file with the director within
the time required by subdivision (a) or (d) of Section 1110 for
payment of employer contributions, a report of contributions, a
quarterly return, and a report of wages paid to the employer's
workers in the form and containing any information as the director
prescribes. An electronic funds transfer of contributions pursuant to
subdivision (f) of Section 1110 shall satisfy the requirement for a
report of contributions. The quarterly return shall include the total
amount of wages, employer contributions required under Sections 976
and 976.6, worker contributions required under Section 984, the
amounts required to be withheld under Section 13020, or withheld
under Section 13028, and any other information as the director shall
prescribe. The report of wages shall include individual amounts
required to be withheld under Section 13020 or withheld under Section
13028.
(2) (A) In order to enhance efforts to reduce tax fraud and to
reduce the personal income tax reporting burden, effective January 1,
1997, the report of wages shall also include the full first name of
the employee and total wages, as defined in Section 13009, paid to
each employee. This paragraph shall apply to reports of wages for all
periods ending on or before December 31, 1999.
(B) For all periods beginning on or after January 1, 2000, the
report of wages shall also include total wages subject to personal
income tax, as defined in Section 13009.5, paid to each employee.
(b) Each employer shall file with the director within the time
required by subdivision (b) or (d) of Section 1110 for payment of
worker contributions, a report of contributions containing the
employer's business name, address, and account number, the total
amount of worker contributions due, and any other information as the
director shall prescribe. The director shall prescribe the form for
the report of contributions. An electronic funds transfer of
contributions pursuant to subdivision (f) of Section 1110 shall
satisfy the requirement for a report of contributions.
(c) In addition to the report of contributions, quarterly return,
and report of wages required by employers under subdivision (a), an
individual who has elected coverage under subdivision (a) of Section
708 is also required to file a separate report of contributions, and
quarterly return, subject to Part 2 (commencing with Section 2601).
(d) Any employer making an election under subdivision (d) of
Section 1110 shall submit the report of wages described in
subdivision (a), within the time required for submitting employer
contributions under subdivision (a) of Section 1110.
(e) For purposes of making a report of wages under subdivision
(a), employers that are required under Section 6011 of the Internal
Revenue Code and authorized regulations thereunder to file magnetic
media returns, shall, within 90 days of becoming subject to this
requirement, do one of the following:
(1) File any subsequent reports of wages electronically.
(2) Establish to the satisfaction of the director that there is a
lack of automation, a severe economic hardship, a current exemption
from submitting magnetic media or electronic information returns for
federal purposes, or other good cause for not complying with this
subdivision. Approved waivers shall be valid for one year or longer,
at the discretion of the director.
(f) The Franchise Tax Board shall be allowed access to the
information filed with the department pursuant to this section.
(g) The requirement in subdivision (a) to file a quarterly return
shall begin with the first calendar quarter of the 2011 calendar
year.
(h) (1) Notwithstanding subdivision (e), effective January 1,
2017, an employer with 10 or more employees shall file the report of
contributions, quarterly return, and report of wages electronically.
(2) Notwithstanding subdivision (e), effective January 1, 2018,
all employers shall file the report of contributions, quarterly
return, and report of wages electronically.
(3) Notwithstanding paragraphs (1) and (2), an employer may
request a waiver from the electronic filing requirements of this
subdivision. The department may grant the waiver when the employer
has established to the satisfaction of the director that there is a
lack of automation, a severe economic hardship, a current exemption
from filing electronically for federal purposes, or other good cause.
An approved waiver shall be valid for one year or longer, at the
discretion of the director.
SEC. 2. Section 1110 of the Unemployment Insurance Code is amended
to read:
1110. (a) Employer contributions required under Sections 976 and
976.6, the amount of benefits received by any individual pursuant to
this part that is deducted from an award or settlement made by the
employer under the provisions of Section 1382, and, except as
provided by subdivision (b) of this section, worker contributions
required under Section 984 are due and payable on the first day of
the calendar month following the close of each calendar quarter and
shall become delinquent if not paid on or before the last day of that
month.
(b) Worker contributions required under Section 984 are due and
payable at the same time and by the same method as amounts required
to be withheld under Section 13020 are paid to the department
pursuant to Section 13021, regardless of the amount of accumulated
unpaid liability for worker contributions.
(c) Employer contributions submitted pursuant to Section 976.5
shall be paid on or before the last working day of March of the
calendar year to which the reduced contribution rate would be
applicable. Any employer whose eligibility for an unemployment
insurance contribution rate determination is redetermined to make
that employer eligible to submit voluntary unemployment insurance
contributions in accordance with Section 976.5, may submit a
voluntary unemployment insurance contribution within 30 days of the
date of notification of the redetermination.
(d) Except as provided in subdivision (e), any employer described
in Sections 682 and 684 may elect to report and pay employer
contributions required under Sections 976 and 976.6, and worker
contributions required under Section 984, annually. All contributions
are due and payable on the first day of January following the close
of the prior calendar year and shall become delinquent if not paid on
or before the last day of that month. An election under this
subdivision shall be effective the first day of the calendar year in
which it is approved by the department. An election under this
subdivision may not be approved if the employer has an outstanding
return or report delinquency on the records of the department, or an
unpaid amount owed to the department, that is not the subject of a
timely petition for reassessment pending before the appeals board at
the time the election is filed.
(e) An employer described in Sections 682 and 684 who pays more
than twenty thousand dollars ($20,000) in wages annually, shall not
be entitled to the election allowed in subdivision (d). If at any
time during the year the total wages paid by an employer electing to
file under subdivision (d) exceeds twenty thousand dollars ($20,000),
the election shall be terminated at the close of that calendar
quarter. In addition to the report of wages due for that quarter, the
employer shall file a return and pay any contributions due for that
portion of the year during which the election was in effect, and
shall pay contributions in accordance with subdivisions (a), (b), and
(c) for the remainder of that year.
(f) Contributions due pursuant to this section may be submitted by
electronic funds transfer. Contributions submitted by electronic
funds transfer shall be deemed complete in accordance with paragraph
(4) of subdivision (e) of Section 13021.
(g) (1) Notwithstanding subdivision (f), effective on and after
January 1, 2017, an employer with 10 or more employees shall remit
the contributions and withholdings by electronic funds transfer.
(2) Notwithstanding subdivision (f), effective on and after
January 1, 2018, all employers shall remit the contributions and
withholdings by electronic funds transfer.
(3) Notwithstanding paragraphs (1) and (2), an employer may
request a waiver from the electronic funds transfer requirement of
this subdivision. The department may grant the waiver when the
employer has established to the satisfaction of the director that
there is a lack of automation, a severe economic hardship, a current
exemption from filing electronically for federal purposes, or other
good cause. An approved waiver shall be valid for one year or longer,
at the discretion of the director.
(h) For purposes of this section, "electronic funds transfer"
shall have the same meaning as in Section 13021.5.
SEC. 3. Section 1112 of the Unemployment Insurance Code is amended
to read:
1112. (a) Any employer who without good cause fails to pay any
contributions required of him or her or of his or her workers, except
amounts assessed under Article 8 (commencing with Section 1126),
within the time required shall pay a penalty of 15 percent of the
amount of those contributions.
(b) Any employer required to remit payments electronically who
without good cause remits those amounts by means other than
electronic shall pay a penalty of 15 percent of the amount of those
contributions.
(c) Notwithstanding subdivision (b), on and after January 1, 2017,
and before January 1, 2019, an employer required to remit payments
electronically, excluding employers previously required to remit
payments by electronic funds transfer under Section 13021, who remits
those amounts within the time required by means that are not
electronic shall not be subject to the penalty described in
subdivision (b).
(d) The changes made to this section by Chapter 28 of the Statutes
of 2014 shall apply on and after July 1, 2014.
SEC. 4. Section 1112.1 is added to the Unemployment Insurance
Code, to read:
1112.1. (a) An employer who is required to file a quarterly
return electronically pursuant to Section 1088 and without good cause
fails to file a quarterly return electronically shall pay a penalty
of fifty dollars ($50), in addition to any other penalties imposed by
this code.
(b) Notwithstanding subdivision (a), on and after January 1, 2017,
and before January 1, 2019, an employer required to file a quarterly
return electronically who files a quarterly return within the time
required by means that are not electronic shall not be subject to the
penalty described in subdivision (a).
SEC. 5. Section 1114 of the Unemployment Insurance Code is amended
to read:
1114. (a) Any employer who, without good cause, fails to file
within 15 days after service by the director of notice pursuant to
Section 1206 of a specific written demand therefor, a report of wages
of each of his or her workers required by this division, shall pay
in addition to other amounts required, for each unreported wage item
a penalty of twenty dollars ($20).
(b) Any employer required by this division to file a report of
wages of each of his or her workers on magnetic media or other
electronic means as prescribed by subdivision (e) or (h) of Section
1088, who, without good cause, instead files a report of wages by
means other than electronic, shall pay, in addition to other amounts
required, for each wage item a penalty of twenty dollars ($20).
(c) Notwithstanding subdivision (b), on and after January 1, 2017,
and before January 1, 2019, an employer required to file a report of
wages, excluding employers previously required to file a report of
wages under subdivision (e) of Section 1088, who files a report of
wages within the time required by means that are not electronic shall
not be subject to the penalty described in subdivision (b).
(d) The changes made to this section by Chapter 28 of the Statutes
of 2014 shall apply on and after July 1, 2014.
SEC. 6. Section 13002 of the Unemployment Insurance Code is
amended to read:
13002. The following provisions of this code shall apply to any
amount required to be deducted, reported, and paid to the department
under this division:
(a) Sections 301, 305, 306, 310, 311, 312, 317, and 318, relating
to general administrative powers of the department.
(b) Sections 403 to 413, inclusive, Section 1336, and Chapter 8
(commencing with Section 1951) of Part 1 of Division 1, relating to
appeals and hearing procedures.
(c) Sections 1110.6, 1111, 1111.5, 1112, 1112.1, 1113, 1113.1,
1114, 1115, 1116, and 1117, relating to the making of returns or the
payment of reported contributions.
(d) Article 8 (commencing with Section 1126) of Chapter 4 of Part
1 of Division 1, relating to assessments.
(e) Article 9 (commencing with Section 1176), except Section 1176,
of Chapter 4 of Part 1 of Division 1, relating to refunds and
overpayments.
(f) Article 10 (commencing with Section 1206) of Chapter 4 of Part
1 of Division 1, relating to notice.
(g) Article 11 (commencing with Section 1221) of Chapter 4 of Part
1 of Division 1, relating to administrative appellate review.
(h) Article 12 (commencing with Section 1241) of Chapter 4 of Part
1 of Division 1, relating to judicial review.
(i) Chapter 7 (commencing with Section 1701) of Part 1 of Division
1, relating to collections.
(j) Chapter 10 (commencing with Section 2101) of Part 1 of
Division 1, relating to violations.
SEC. 7. Section 13021 of the Unemployment Insurance Code is
amended to read:
13021. (a) Every employer required to withhold any tax under
Section 13020 shall for each calendar quarter, whether or not wages
or payments are paid in the quarter, file a withholding report, a
quarterly return, as described in subdivision (a) of Section 1088,
and a report of wages in a form prescribed by the department, and pay
over the taxes so required to be withheld. The report of wages shall
include individual amounts required to be withheld under Section
13020 or withheld under Section 13028. Except as provided in
subdivisions (c) and (d), the employer shall file a withholding
report, a quarterly return, as described in subdivision (a) of
Section 1088, and a report of wages, and remit the total amount of
income taxes withheld during the calendar quarter on or before the
last day of the month following the close of the calendar quarter.
(b) Every employer electing to file a single annual return under
subdivision (d) of Section 1110 shall report and pay any taxes
withheld under Section 13020 on an annual basis within the time
specified in subdivision (d) of Section 1110.
(c) (1) Effective January 1, 1995, whenever an employer is
required, for federal income tax purposes, to remit the total amount
of withheld federal income tax in accordance with Section 6302 of the
Internal Revenue Code and regulations thereunder, and the
accumulated amount of state income tax withheld is more than five
hundred dollars ($500), the employer shall remit the total amount of
income tax withheld for state income tax purposes within the number
of business days as specified for withheld federal income taxes by
Section 6302 of the Internal Revenue Code, and regulations
thereunder.
(2) Effective January 1, 1996, the five hundred dollar ($500)
amount referred to in paragraph (1) shall be adjusted annually as
follows, based on the annual average rate of interest earned on the
Pooled Money Investment Account as of June 30 in the prior fiscal
year:
Average Rate of Interest
Greater than or equal to 9 $ 75
percent:
Less than 9 percent, but greater than
or equal
to 250
7 percent:
Less than 7 percent, but greater than
or equal
to 400
4 percent:
Less than 4 percent: 500
(d) (1) Notwithstanding subdivisions (a) and (c), for calendar
years beginning on and after January 1, 1995, if in the 12-month
period ending June 30 of the prior year, the cumulative average
payment made pursuant to this division or Section 1110 for any
deposit periods, as described under Section 6302 of the Internal
Revenue Code and regulations thereunder, was twenty thousand dollars
($20,000) or more, the employer shall remit the total amount of
income tax withheld within the number of business days as specified
for filing federal income taxes by Section 6302 of the Internal
Revenue Code, relating to mode or time of collection, and regulations
thereunder. For purposes of this subdivision, payment shall be made
by electronic funds transfer in accordance with Section 13021.5, for
one calendar year beginning on January 1. 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 business day
following the date the transfer is initiated. If settlement to the
state's demand account does not occur on or before the business day
following the date the transfer is initiated, payment is deemed
complete on the date settlement occurs. The department shall, on or
before October 31 of the prior year, notify all employers required by
this paragraph to make payments by electronic funds transfer of
these requirements.
(2) Effective January 1, 2017, paragraph (1) shall not apply to an
employer subject to the electronic filing requirements of Section
1088. Effective January 1, 2017, an employer subject to the
electronic filing requirements of Section 1088 shall remit the total
amount of income tax withheld within the number of business days
specified in Section 6302 of the Internal Revenue Code and the
regulations adopted thereunder for filing federal income taxes.
Payment shall be deemed complete on the date the electronic funds
transfer is initiated if settlement to the state's demand account
occurs on or before the business day following the date the transfer
is initiated. If settlement to the state's demand account does not
occur on or before the business day following the date the transfer
is initiated, payment is deemed complete on the date settlement
occurs.
(3) Notwithstanding paragraphs (1) and (2), effective January 1,
1995, electronic funds transfer payments that are subject to the
one-day deposit rule, as described by Section 6302 of the Internal
Revenue Code and regulations thereunder, shall be deemed timely if
the payment settles to the state's demand account within three
business days after the date the employer meets the threshold for the
one-day deposit rule.
(4) Any taxpayer required to remit payments pursuant to paragraphs
(1) and (2) may request from the department a waiver of those
requirements. The department may grant a waiver only if it determines
that the particular amount paid in excess of twenty thousand dollars
($20,000), as stated in paragraph (1) was the result of an
unprecedented occurrence for that employer, and was not
representative of the employer's cumulative average payment in prior
years.
(5) A state agency required to remit payments pursuant to
paragraphs (1) and (2) may request a waiver of those requirements
from the department. The department may grant a waiver if it
determines that there will not be a negative impact on the interest
earnings of the General Fund. If there is a negative impact to the
General Fund, the department may grant a waiver if the requesting
state agency follows procedures designated by the department to
mitigate the impact to the General Fund.
(e) An employer not required to make payment pursuant to
subdivision (d) may elect to make payment by electronic funds
transfer in accordance with Section 13021.5 under the following
conditions:
(1) The election shall be made in a form, and shall contain
information, as prescribed by the director, and shall be subject to
approval by the department.
(2) If approved, the election shall be effective on the date
specified in the notification to the employer of approval.
(3) The election shall be operative from the date specified in the
notification of approval, and shall continue in effect until
terminated by the employer or the department.
(4) Funds remitted by electronic funds transfer pursuant to this
subdivision shall be deemed complete in accordance with subdivision
(d) or as deemed appropriate by the director to encourage use of this
payment method.
(f) Notwithstanding Section 1112, interest and penalties shall not
be assessed against an employer that remits at least 95 percent of
the amount required by subdivision (c) or (d) if the failure to remit
the full amount is not willful and any remaining amount due is paid
with the next payment. The director may allow any employer to submit
the amounts due from multiple locations upon a showing that those
submissions are necessary to comply with subdivision (c) or (d).
(g) The department may, if it believes that action is necessary,
require any employer to make the report or return required by this
section and pay to it the tax deducted and withheld at any time, or
from time to time but no less frequently than provided for in
subdivision (a).
(h) An employer required to withhold any tax and that is not
required to make payment under subdivision (c) shall remit the total
amount of income tax withheld during each month of each calendar
quarter, on or before the 15th day of the subsequent month if the
income tax withheld for any of the three months or, cumulatively for
two or more months, is three hundred fifty dollars ($350) or more.
(i) For purposes of subdivisions (a), (c), and (h), payment that
is not required to be made by electronic funds transfer is deemed
complete when it is placed in a properly addressed envelope, bearing
the correct postage, and it is deposited in the United States mail.
(j) (1) In addition to the withholding report, quarterly return,
and report of wages described in subdivision (a), each employer shall
file with the director an annual reconciliation return showing the
amount required to be withheld under Section 13020, and any other
information the director shall prescribe. This annual reconciliation
return shall be due on the first day of January following the close
of the prior calendar year and shall become delinquent if not filed
on or before the last day of that month.
(2) The requirement to file the annual reconciliation return for
the prior calendar year under this subdivision shall not apply to the
2012 calendar year and thereafter.
(k) The requirement in subdivision (a) to file a quarterly return
shall begin with the first calendar quarter of the 2011 calendar
year.
(l) The changes made to this section by Chapter 783 of the
Statutes of 2012 shall apply on and after January 1, 2013.
