New E-File Requirements in New Jersey, California
February 13, 2015
By Gary Bingel, CPA
In accordance with NJ Admin. Reg. Section 18:7-11.19, eff. 1/20/2015, all NJ taxpayers and preparers should be advised that beginning with tax years starting on or after January 1, 2015, all tax preparers must make all corporate business tax payments and filings electronically, including estimated payments. Further, for tax years beginning on or after January 1, 2016, taxpayers that file their own corporate business tax returns must do so electronically, including making all payments electronically.
Currently, the New Jersey Division of Taxation has yet to determine the proper method of electronic payment (EFT (ACH Debit/Credit), E-Check, or Credit Card). Should the New Jersey Division of Taxation require EFT payments, the taxpayer must enroll in EFT online and select whether they are electing to use ACH Debit or ACH Credit. The taxpayer would then have to provide the routing number, bank account number, whether it is a checking/savings, business/personal, and their e-filing PIN, which can be requested online if a taxpayer does not have one, when enrolling in EFT. This information would also have to be provided to the tax preparer. If the New Jersey Division of Taxation allows any other form of payment, e-check or credit card, an enrollment would not be needed with these methods. The tax preparer would only require the information applicable to these methods of payments.
At this point, the New Jersey Division of Taxation has yet to state or require a certain amount of funding time prior to the payments being transferred. Currently, NJ requires that there be sufficient funds available prior to making a transfer, but they do not specify a time period prior to the transfer that the funds need to be made available. These and any other administrative issues are currently being addressed by the Division of Taxation.
In accordance with this California Legislative Information, effective January 1, 2015, California stated that for taxable years beginning on or after January 1, 2014, an electronic filing requirement was placed for business entities. Any business entity return that is prepared using tax preparation software must be filed electronically. However, California did not state an electronic payment requirement. California will still accept multiple methods of payment for businesses. The required entities include S Corporations, an organization exempt pursuant to Chapter 4 of Part 11, a partnership or a limited liability company. A business entity may annually request a waiver of the requirements for electronic filing from the Franchise Tax Board. The Franchise Tax Board may grant a waiver if it determines that the business entity is unable to comply with the requirements due to, but not limited to, technology constraints or due to other reasonable causes, and not willful neglect. If a business entity that is required to electronically file a return fails to file electronically, they will be subject to a penalty in the amount of $100 for an initial failure and $500 for each subsequent failure unless the failure is due to reasonable cause, and not willful neglect. If a group return is filed on behalf of eligible electing taxpayer members of a combine group, the penalties would be applied to the combined reporting group and not the taxpayer of the reporting group.
For any additional information, please refer to the California FAQ on California business e-file program.