(a)
Definitions.
(1) "Electronic funds transfer"
means any transfer of funds, other than a transaction originated by check,
draft, or similar paper instrument, that is initiated through an electronic
terminal, telephonic instrument, or computer or magnetic tape, so as to order,
instruct, or authorize a financial institution to debit or credit an account.
Electronic funds transfers shall be accomplished by an automated clearinghouse
debit, an automated clearinghouse credit, or by Federal Reserve Wire
Transfer.
(2) "Automated
clearinghouse" means any federal reserve bank, or an organization established
in agreement with the National Automated Clearing House Association, that
operates as a clearinghouse for transmitting or receiving entries between banks
or bank accounts and which authorizes an electronic transfer of funds between
these banks or bank accounts.
(3)
"Automated clearinghouse debit" means a transaction in which the state, through
its designated depository bank, originates an automated clearinghouse
transaction debiting the person's bank account and crediting the state's bank
account for the amount due. Banking costs incurred for the automated
clearinghouse debit transaction shall be paid by the state.
(4) "Automated clearinghouse credit" means an
automated clearinghouse transaction in which the person through his or her own
bank, originates an entry crediting the state's bank account and debiting his
or her own bank account. Banking costs incurred for the automated clearinghouse
credit transaction charged to the state shall be paid by the person originating
the credit.
(5) "Federal Reserve
Wire Transfer" means any transaction originated by a person and utilizing the
national electronic payment system to transfer funds through the federal
reserve banks, when that person debits his or her own bank account and credits
the state's bank account. Electronic funds transfers pursuant to Revenue and
Taxation Code section
6479.3
may be made by Federal Reserve Wire Transfer only if payment cannot, for good
cause, be made according to subdivision (a)(1) of this regulation, and the use
of Federal Reserve Wire Transfer is preapproved pursuant to subdivision (h) of
this regulation. Banking costs incurred for the Federal Reserve Wire Transfer
transaction charged to the person and to the state shall be paid by the person
originating the transaction.
(b) Participation.
(1) Mandatory Participation. Prior to January
1, 2006, persons with an estimated monthly tax liability of twenty thousand
dollars ($20,000) or more were required to remit amounts due by electronic
funds transfer under procedures set forth in this regulation. Operative January
1, 2006, persons with an estimated monthly tax liability of ten thousand
dollars ($10,000) or more are required to remit amounts due by electronic funds
transfer under procedures set forth in this regulation. To identify mandatory
participants, the Board shall conduct an annual review of all persons with
sales and use tax permits. The review is performed by calculating an average
monthly tax liability for a twelve-month period. Persons whose average monthly
tax liability equals or exceeds the threshold for mandatory participation will
be required to remit payments by electronic funds transfer. If a person did not
begin making sales until after the beginning of the designated twelve-month
review period, then the monthly tax liability will be calculated based upon the
number of months in which sales were made (for example, in a calendar year
review period, if the person obtains a seller's permit and begins making sales
in May, the total tax liability would be divided by eight to determine the
average monthly tax liability since there are eight months remaining in the
evaluation period). Persons registering to report and pay sales or use tax for
the first time, except certain successors, will not be required to participate
in the electronic funds transfer program until an annual review is conducted.
A successor will be regarded as having an estimated tax
liability that equals or exceeds the threshold for mandatory participation in
the electronic funds transfer program when the monthly tax liability of the
predecessor equalled or exceeded the threshold for mandatory participation or
the predecessor was a mandatory participant in the electronic funds transfer
program. If the successor purchases a portion of a business that is required to
participate in the mandatory electronic funds transfer program (e.g. a multiple
outlet business that only sells some, but not all, of its locations), the
average monthly tax liability of the purchased locations will be computed to
determine if the successor meets the threshold to be identified as a mandatory
participant in the electronic funds transfer program.
After an annual review, if a person drops below the
threshold for mandatory participation, the Board shall provide notification, in
writing, that the status has been changed from mandatory participation to
voluntary participation in the electronic funds transfer program. If, at that
time, a person wishes to discontinue making electronic funds transfer payments,
a written request must be made to the Board. Payments must continue to be
remitted by electronic funds transfer until the taxpayer is notified by the
Board, in writing, of an effective date of withdrawal from the program. Any
person who fails to comply with the mandatory participation requirements under
this subdivision shall be liable for penalty as provided under Revenue and
Taxation Code section
6479.3.
(2) Voluntary Participation. Any person not
meeting the criteria for mandatory participation set forth in subdivision
(b)(1) may participate in the program on a voluntary basis. A person must
register with the Board prior to participation. If a person wishes to
discontinue making electronic funds transfer payments, a written request must
be made to the Board. Payments must continue to be remitted by electronic funds
transfer until notified by the Board, in writing, of an effective date of
withdrawal from the program.
(c) Date of Payment. Payment is deemed
complete on the date the electronic funds transfer is initiated, if the
settlement to the state's demand account occurs on or before the banking day
following the date the transfer is initiated. If the 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 to occur on the date settlement
occurs.
(d) Filing of Returns. In
addition to a tax payment made by electronic funds transfer, a return must be
filed on or before the due date. Any person who fails to comply with this
provision shall be subject to penalty charges as provided under Revenue and
Taxation Code section
6479.3.
(e) Failure to Pay by Electronic Funds
Transfer. Any person required to pay taxes by electronic funds transfer must
continue to do so until the Board advises that person otherwise in writing. Any
person required to pay taxes by electronic funds transfer, as set forth in
subdivision (b)(1), who does not pay through electronic funds transfer but uses
another means (e.g., pay by check), will be assessed a penalty as provided by
Revenue and Taxation Code section
6479.3.
(f) Reporting Prepayments. Any person
required to make prepayments will not receive and is not required to file
prepayment forms; however, a payment must still be made by electronic funds
transfer.
(g) Zero Amount Due. When
no tax is due for a given period, a zero dollar transaction must be made by
electronic funds transfer or the Board must receive written notification
stating that no tax is due for that period.
(h) Emergencies. In emergency situations, a
Federal Reserve Wire Transfer transaction may be used to transmit a payment. A
Federal Reserve Wire Transfer is an electronic payment system used by federal
reserve banks to transfer funds instantaneously. Generally, this method of
payment is not approved for recurring transactions. Authorization must be
received from the Board prior to making a payment by Federal Reserve Wire
Transfer. The person who originates the transfer shall be responsible for any
fees incurred by the Federal Reserve Wire Transfer transaction.
