California – Late Electronic Tax Payments

SALT Report 1532 – The California BOE issued guidance regarding late electronic tax payments that accompany a filed return or prepayment. When a tax payment is late, even by one day, the interest is charged on a monthly basis. However, the BOE recently passed legislation that states that if a payment is late by only one business day, businesses may be eligible to have the interest due for the late payment reduced.
If the Board determines that it is inequitable to charge interest on a monthly basis they now have the authority to compute the interest on a daily basis. The Board will charge interest starting from the date the tax or prepayment was due until the date the payment was received if all of the following conditions are met:
  • The payment of the tax or prepayment was made electronically
  • The payment of the tax or prepayment was made one business day after the due date
  • The taxpayer was granted relief from all penalties that applied to that payment of tax or prepayment
  • The person files a request for an oral hearing before the BOE
To request an oral hearing, taxpayers should use BOE-734 Request to Compute Daily Interest for Electronic Payments.
The reduced payment option does not apply to payments made for deficiency determinations, determinations where no return has been filed, or jeopardy determinations.
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