The California Employment Development Department (EDD) announced that beginning with the first quarter 2019 (returns due April 30, 2019) the Department will start penalizing employers that fail to comply with the requirement to file quarterly returns and pay employment taxes electronically. (California Employer newsletter, second quarter 2018.)

The EDD also announced that the annual unemployment insurance (UI) benefit charge statement (Form DE 428T) for fiscal year 2018 is scheduled to be mailed in September 2018.

Annual statement of benefit charges coming in September 2018

The EDD will mail the annual Form DE 428T, Statement of Charges to Reserve Account, to employers in September 2018. This statement notifies employers of the UI benefit charges and credits to their reserve account based on claims filed by former employees for the fiscal year of July 1, 2017 through June 30, 2018.

It is important that employers review this statement carefully and dispute any incorrect UI benefit charge information in writing within 60 days of the mailing date on the notice. The benefit charges shown on the notice will be used to compute the employer's SUI contribution rate for the 2019 tax year.

EDD will start penalizing for noncompliance in 2019

As we previously reported, 2015 AB 1245 requires that effective January 1, 2018, all employers are required to electronically submit employment tax returns, wage reports, and payroll tax deposits.

Employers of 10 or more employees were required to submit quarterly payroll tax returns and pay the associated payroll taxes electronically effective January 1, 2017. Employers were allowed to apply for a one-year hardship waiver from the requirement to file and pay electronically. (EY Payroll NewsFlash Vol. 16, #231, 8-21-2015; Vol 17, #076, 5-17-2016.)

According to the EDD, effective January 1, 2019, penalties for noncompliance will be charged starting with the first quarter 2019 payments and return and/or report filings as follows.

Filing the following tax returns on paper will result in a $50-per-return penalty:

— Form DE 9, Quarterly Contribution Return and Report of Wages

— Form DE 3HW, Employer of Household Worker(s) Annual Payroll Tax Return

— Form DE 3D, Quarterly Contribution Return

Filing the following wage reports on paper will result in a $20-per-wage-item penalty:

— Form DE 9C, Quarterly Contribution Return and Report of Wages (Continuation)

— Form DE 3BHW, Employer of Household Worker(s) Quarterly Reports of Wages and Withholding

Payment of employment taxes by paper with Form DE 88, Payroll Tax Deposit, will result in a penalty of 15% of amount due.

There are two new online payment options for employers:

— Express Pay, where employers may simply enter their account or letter ID and payment information to make a payroll tax deposit or account payment without creating or logging in to an account. This new payment method satisfies the electronic requirement for payroll tax deposits.

— Payment of garnishments over the employer's e-Services for Business account, where employers may view the Earnings Withholding Order issued, view a list of active employees with Earnings Withholding Orders for taxes, and make a payment.

For more information, see the file and pay options webpage.

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EY Payroll News Flash