We hope this message finds you well. As we navigate through the financial year, we would like to draw your attention to some significant updates from the California Franchise Tax Board (FTB) that might impact your business operations.

Firstly, based on the guidelines detailed on ftb.ca.gov, it is crucial to note that businesses are required to enroll in the Mandatory e-Pay program once they make an estimate or extension payment exceeding $20,000 or when they file an original tax return with a total tax liability exceeding $80,000. Once you meet this threshold, all future payments, regardless of the amount, duration, or taxable year, must be made electronically. Failure to comply can result in a 1% noncompliance penalty on the amount paid.

Moreover, as highlighted in the FTB Tax News from May 2022, the FTB reminds taxpayers that, beginning from the tax year 2021, payments made for the S-Corporation Pass-through Entity Elective Tax will count toward the Mandatory e-Pay requirement. Hence, if your payment for the S-Corporation Pass-through Entity Elective Tax causes you to meet the threshold, you must enroll in the Mandatory e-Pay program and make all future S-corporation payments electronically.

We understand that navigating tax complexities can be daunting. Our team is here to assist you in ensuring your compliance with these new regulations, alleviating any concerns, and providing clarity on any ambiguities. It’s our commitment to keep you informed and support you in every financial decision and responsibility.