Taxation: electronic payments: penalties.

Senators Valladares and Allen propose modifying California's electronic tax payment requirements by introducing automatic penalty waivers for first-time violations occurring after January 1, 2026. Under current law, taxpayers who fail to remit payments electronically when required face a 1% penalty on the amount paid, unless they demonstrate reasonable cause for non-compliance.

The measure maintains existing electronic payment thresholds, which apply to individual taxpayers making estimated tax payments exceeding $20,000 or those with total tax liability over $80,000 in any tax year beginning January 1, 2009. Taxpayers may request discontinuation of electronic payments if their previous year's transactions fall below these thresholds. The Franchise Tax Board retains authority to grant waivers when payment amounts above the thresholds do not reflect a taxpayer's typical tax liability.

The bill preserves the definition of electronic remittance as payments made through Franchise Tax Board applications, including telephone payment options when available. It also continues the existing administrative framework for processing waiver requests and maintaining electronic payment systems, while exempting the Board's procedural guidelines from certain Government Code requirements.