The Employment Development Department (EDD) of California recently released information relating to a new state law for employers within the jurisdiction. Beginning January 1, 2017, companies with 10 or more employees are required to electronically submit wage reports, employment tax returns and payroll tax deposits to the organization. In the state of California, all other employers will also be required to fulfill this action starting January 1, 2018.
While many other states have introduced electronic filing for certain returns, it’s not required in all areas as it will be in California. The federal government, however, has begun regulating which parties are obligated to complete e-filing. Let’s take a closer look:
According to the IRS, most tax return preparers must file using electronic means. Starting January 1, 2012, any party who will file 11 or more of forms 1040, 1040A, 1040EZ and 1041 must use the agency’s e-file system. Companies have to apply to become an authorized e-file provider. The steps are as follows:
- Create an IRS e-services account.
- Submit application to become an authorized IRS e-file provider.
- Pass a suitability check.
- Download publication 3112 for step-by-step guidance.
California isn’t the only state which asks employers to utilize electronic services for filing purposes. Here’s a breakdown of the e-functions available in several other states, according to the Federation of Tax Administrators:
|Alabama||Companies preparing more than 25 individual income tax returns using tax preparation software in 2011 or after must use electronic services for filing purposes.|
|Connecticut||Starting January 1, 2014, everyone filing certain returns (income tax withholding, corporation business tax, business entity tax, etc) must file and pay associated tax electronically.|
|Illinois||Effective January 1, 2011, any party filing more than 100 individual state income tax returns must do so electronically.|
|Kentucky||Any preparers that file more than 10 individual income tax returns are required to file electronically.|
|Michigan||Parties completing more than 10 personal income tax returns are required to use e-file services.|
|Nebraska||Effective January 1, 2010, preparers completing more than 25 returns must file electronically.|
|New York||Tax preparers completing more than 100 original tax documents on or after January 1, 2007, and if the party completes more than 11 or more authorized tax documents using tax software, then all succeeding documents must be filed electronically.|
|Ohio||Tax preparers that completed more than 11 tax returns during the 2012 calendar year must use electronic filing technology beginning January 1, 2013.|
|Pennsylvania||Third-party preparers that submitted at least 11 state income tax returns in calendar years on or after January 1, 2014 must do so electronically.|
|South Carolina||A tax return preparer that completes 100 or more returns for a tax period for the same tax year must use e-services, if available.|
|Texas||Companies that pay more than $100,000 in annual taxes to both file returns and pay taxes electronically.|
|Wyoming||No current plans for e-file mandates.|
It’s important for companies in every state to understand their state and federal obligations when it comes to completing and filing tax returns. Almost all locations have some form of e-services to assist businesses in submitting their forms correctly and in a timely manner. It can be difficult for organizations to keep track of these obligations, especially as new and improved duties are released on a frequent basis.
PTM is a knowledgeable payroll tax partner, able to provide assistance with both state and federal tax return filing. PTM can ensure company documents are completed accurately and filed in the appropriate amount of time, while also maintaining compliance with government standards.