Taxation: electronic funds transfer: penalties.

Senators Valladares and Allen propose replacing California's percentage-based penalties for electronic tax payment violations with fixed monetary penalties, modifying how the state addresses non-compliance with electronic funds transfer requirements for both corporate and individual taxpayers.

The legislation establishes a $100 penalty for first-time violations and $500 for subsequent instances when taxpayers fail to remit payments electronically as required by the Franchise Tax Board. This replaces the current system that imposes penalties of 10% for corporate taxpayers and 1% for individuals based on the amount paid through non-electronic means. The bill maintains existing thresholds that determine when electronic payments become mandatory - including when corporate estimated tax payments exceed $20,000 or when individual tax liability surpasses $80,000.

Under the amended code, taxpayers retain the ability to request waivers from electronic payment requirements if they can demonstrate that payments exceeding the thresholds were not representative of their typical tax liability. The legislation preserves provisions allowing taxpayers to elect to discontinue electronic payments if their prior year's transactions fell below the mandatory thresholds. These determinations continue to follow Franchise Tax Board procedures for evaluating and processing such requests.