The California legislature passed a law mandating e-filing of most business returns beginning with 2014 returns filed in 2015. This legislation was signed into law. Exemptions are available but must be requested from the Franchise Tax Board. Although not mentioned in the law, presumably a return that fails in e-filing (is rejected by the FTB) would also be allowed to be paper filed.
The exemptions that are available are for technology issues and other items that constitute “reasonable cause and not willful neglect.” A penalty of $100 for an initial failure is in the law, with repeated violations being charged $500. The requirement applies to C-Corporations, S-Corporations, partnerships, LLCs, and exempt organizations.
There is one major issue with the law that I see: Most tax software today does not allow for electronic filing of a single-member LLC return (a disregarded entity). While there is no federal return for such an entity, California does require the return to be filed (and an $800 annual fee be paid). California also does not have its own online system to e-file business returns. My software currently does not have the ability to e-file a California single-member LLC return. I’ll be asking my software provider about this…but not until after October 15th.
Tags: efiling