BILL NUMBER: AB 1245 INTRODUCED
BILL TEXT
INTRODUCED BY Assembly Member Cooley
FEBRUARY 27, 2015
An act to amend Sections 1088, 1110, 1112, 1114, and 13021 of the
Unemployment Insurance Code, relating to unemployment insurance.
LEGISLATIVE COUNSEL'S DIGEST
AB 1245, as introduced, 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 would, beginning on January 1, 2016, and except as
provided, 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. The
bill would extend the application of these electronic filing and
transfer requirements to all employers beginning on January 1, 2017.
The bill would authorize the granting of a waiver from these
requirements, as specified.
(2) Existing law imposes a 15% penalty on an employer who fails to
timely pay its 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 or contributions by electronic
funds transfer.
(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, 2016, would require an employer
who is 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 require the Department of Employment Development to notify
certain employers of these requirements, as specified.
The bill would also make related conforming changes.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.
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 his or her 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) (1) In addition to the report of contributions, quarterly
return, and report of wages described in subdivision (a), each
employer shall file with the director an annual reconciliation return
showing 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. 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) This subdivision shall not apply to individuals electing
coverage under Section 708 or 708.5 or employers electing financing
under Section 821.
(3) 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.
(f) For (1) Except
as provided in paragraph (2), for purposes of making a report
of wages under subdivision (a), employers who 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)
(A) Submit a magnetic media format to the
department for approval, and upon receiving approval from the
department, submit File any subsequent reports
of wages on magnetic media. electronically.
(2)
( B) 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 the provisions of
this subdivision. Approved waivers shall be valid for six
months or longer, at the discretion of the director.
(2) The requirement to file the report of wages pursuant to this
subdivision shall not apply to an employer who is required to file
electronically pursuant to subdivision (i).
(g) The Franchise Tax Board shall be allowed access to the
information filed with the department pursuant to this section.
(h) The requirement in subdivision (a) to file a quarterly return
shall begin with the first calendar quarter of the 2011 calendar
year.
(i) (1) Effective January 1, 2016, except as provided in
subdivision (f), an employer with 10 or more employees shall file the
quarterly return, report of wages paid, and annual reconciliation
return electronically.
(2) Effective January 1, 2017, except as provided in subdivision
(f), all employers shall file the quarterly return, report of wages
paid, and annual reconciliation return electronically.
(4) 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 the there is
a lack of automation, a severe economic hardship, a current
exemption from filing electronically for federal purposes, or for
good cause. An approved waiver shall be valid for six months 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 shall 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) Any 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 Except as
required in subdivision (g), contributions due pursuant to this
section may be submitted by electronic funds transfer , as
defined in Section 13021.5 . Contributions submitted by
electronic funds transfer shall be deemed complete in accordance with
paragraph (4) of subdivision (e) of Section 13021.
(g) (1) Effective January 1, 2016, an employer with 10 or more
employees shall remit the contributions and benefit amounts by
electronic funds transfer.
(2) Beginning on January 1, 2017, all employers shall remit the
contributions and benefit amounts by electronic funds transfer.
(3) Notwithstanding paragraphs (1) and (2), an employer may
request a temporary 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 the there is a lack of automation, a severe economic hardship,
a current exemption from filing electronically for federal purposes,
or for good cause. An approved waiver shall be valid for six months
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 of this chapter,
(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
pursuant to paragraph (2) of subdivision (d) of Section 13021 or
by electronic funds transfer pursuant to paragraph (1) of
subdivision (d) of Section 13021, who without good cause remits
those amounts by means other than electronic funds transfer shall
pay a penalty of 15 percent of the amount of those contributions.
(c) The changes made to this section by the act adding
this subdivision Chapter 28 of the Statutes of 2014
shall apply on and after July 1, 2014.
SEC. 4. 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 (f) or (g)
of Section 1088, who, without good cause, instead files a
report of wages on paper or in another form,
by means that are not electronic, shall pay in addition to
other amounts required, for each wage item a penalty of twenty
dollars ($20).
(c) The changes made to this section by the act adding
this subdivision Chapter 28 of the Statutes of 2014
shall apply on and after July 1, 2014.
SEC. 5. 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 prescribed 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
prescribed 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 percent: $ 75
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 prior to 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 eight-month periods,
as defined under Section 6302 of the Internal Revenue Code and
regulations thereunder, was fifty thousand dollars ($50,000) or more,
the employer shall remit the total amount of income tax withheld
within three banking days following the close of each eight-month
period, as described by Section 6302 of the Internal Revenue Code 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 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 complete on the date settlement occurs. The
department shall, on or before October 31 of the prior year, notify
all employers required to make payment by electronic funds transfer
of these requirements.
(2)
(d) (1) Notwithstanding
subdivisions (a) and (c), for calendar years beginning on or 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 federal income taxes by Section 6302
of the Internal Revenue Code 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.
(3)
(2) Effective January 1, 2016, paragraph (1) shall not apply to an
employer who is subject to the electronic filing requirements of
Section 1088. Effective January 1, 2016, an employer who is 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. The department shall, on or before each October 31, beginning
October 31, 2016, notify employers who will be subject to the
requirements of this paragraph.
( 3) Notwithstanding paragraph (2),
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 amounts amount
paid in excess of fifty thousand dollars ($50,000) or
twenty thousand dollars ($20,000), as stated in
paragraphs paragraph (1) and (2),
respectively, were was the result of an
unprecedented occurrence for that employer, and were
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 the act adding
this subdivision Chapter 783 of the Statutes of 2012
shall apply on and after January 1, 2013.