13020-13031
UNEMPLOYMENT INSURANCE CODE
SECTION 13020-13031
13020. (a) (1) Every employer who pays wages to a resident employee
for services performed either within or without this state, or to a
nonresident employee for services performed in this state, shall
deduct and withhold from those wages, except as provided in
subdivision (c) and Sections 13025 and 13026, for each payroll
period, a tax computed in that manner as to produce, so far as
practicable, with due regard to the credits for personal exemptions
allowable under Section 17054 of the Revenue and Taxation Code, a sum
which is substantially equivalent to the amount of tax reasonably
estimated to be due under Part 10 (commencing with Section 17001) of
Division 2 of the Revenue and Taxation Code resulting from the
inclusion in the gross income of the employee of the wages which were
subject to withholding. The method of determining the amount to be
withheld shall be prescribed by the Franchise Tax Board pursuant to
Section 18663 of the Revenue and Taxation Code.
(2) For each payroll period ending on or after November 1, 2009,
the sum shall comport with the changes made to Section 18663 of the
Revenue and Taxation Code, by the act adding this paragraph.
(b) The department upon request may permit the use of accounting
machines to calculate the proper amount to be deducted and withheld
from wages, if the calculation produces an amount substantially
equivalent to the amount of tax required to be withheld under
subdivision (a).
(c) Withholding shall not be required by this section with respect
to wages, salaries, fees, or other compensation paid by a
corporation for services performed in California for that corporation
to a nonresident corporate director for director services, including
attendance at a board of directors' meeting.
13021. (a) Every employer required to withhold any tax under
Section 13020 shall for each calendar quarter, whether or not wages
or payments are paid in the quarter, file a withholding report, a
quarterly return, as prescribed in subdivision (a) of Section 1088,
and a report of wages in a form prescribed by the department, and pay
over the taxes so required to be withheld. The report of wages shall
include individual amounts required to be withheld under Section
13020 or withheld under Section 13028. Except as provided in
subdivisions (c) and (d), the employer shall file a withholding
report, a quarterly return, as prescribed in subdivision (a) of
Section 1088, and a report of wages, and remit the total amount of
income taxes withheld during the calendar quarter on or before the
last day of the month following the close of the calendar quarter.
(b) Every employer electing to file a single annual return under
subdivision (d) of Section 1110 shall report and pay any taxes
withheld under Section 13020 on an annual basis within the time
specified in subdivision (d) of Section 1110.
(c) (1) Effective January 1, 1995, whenever an employer is
required, for federal income tax purposes, to remit the total amount
of withheld federal income tax in accordance with Section 6302 of the
Internal Revenue Code and regulations thereunder, and the
accumulated amount of state income tax withheld is more than five
hundred dollars ($500), the employer shall remit the total amount of
income tax withheld for state income tax purposes within the number
of banking days as specified for withheld federal income taxes by
Section 6302 of the Internal Revenue Code, and regulations
thereunder.
(2) Effective January 1, 1996, the five hundred dollar ($500)
amount referred to in paragraph (1) shall be adjusted annually as
follows, based on the annual average rate of interest earned on the
Pooled Money Investment Fund as of June 30 in the prior fiscal year:
Average Rate of Interest
Greater than or equal to 9 percent: $ 75
Less than 9 percent, but greater than
or equal 250
to
7 percent:
Less than 7 percent, but greater than
or equal 400
to
4 percent:
Less than 4 percent: 500
(d) (1) Notwithstanding subdivisions (a) and (c), for calendar
years beginning prior to January 1, 1995, if in the 12-month period
ending June 30 of the prior year the cumulative average payment made
pursuant to this division or Section 1110, for eight-month periods,
as defined under Section 6302 of the Internal Revenue Code and
regulations thereunder, was fifty thousand dollars ($50,000) or more,
the employer shall remit the total amount of income tax withheld
within three banking days following the close of each eight-month
period, as defined by Section 6302 of the Internal Revenue Code and
regulations thereunder. For purposes of this subdivision, payment
shall be made by electronic funds transfer in accordance with Section
13021.5, for one calendar year beginning on January 1. Payment is
deemed complete on the date the electronic funds transfer is
initiated if settlement to the state's demand account occurs on or
before the banking day following the date the transfer is initiated.
If 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 complete on the date settlement occurs. The
department shall, on or before October 31 of the prior year, notify
all employers required to make payment by electronic funds transfer
of these requirements.
(2) Notwithstanding subdivisions (a) and (c), for calendar years
beginning on or after January 1, 1995, if in the 12-month period
ending June 30 of the prior year, the cumulative average payment made
pursuant to this division or Section 1110 for any deposit periods,
as defined under Section 6302 of the Internal Revenue Code and
regulations thereunder, was twenty thousand dollars ($20,000) or
more, the employer shall remit the total amount of income tax
withheld within the number of banking days as specified for federal
income taxes by Section 6302 of the Internal Revenue Code and
regulations thereunder. For purposes of this subdivision, payment
shall be made by electronic funds transfer in accordance with Section
13021.5, for one calendar year beginning on January 1. Payment is
deemed complete on the date the electronic funds transfer is
initiated if settlement to the state's demand account occurs on or
before the banking day following the date the transfer is initiated.
If 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 complete on the date settlement occurs. The
department shall, on or before October 31 of the prior year, notify
all employers required by this paragraph to make payments by
electronic funds transfer of these requirements.
(3) Notwithstanding paragraph (2), effective January 1, 1995,
electronic funds transfer payments that are subject to the one-day
deposit rule, as defined by Section 6302 of the Internal Revenue Code
and regulations thereunder, shall be deemed timely if the payment
settles to the state's demand account within three banking days after
the date the employer meets the threshold for the one-day deposit
rule.
(4) Any taxpayer required to remit payments pursuant to paragraphs
(1) and (2) may request from the department a waiver of those
requirements. The department may grant a waiver only if it determines
that the particular amounts paid in excess of fifty thousand dollars
($50,000) or twenty thousand dollars ($20,000), as stated in
paragraphs (1) and (2), respectively, were the result of an
unprecedented occurrence for that employer, and were not
representative of the employer's cumulative average payment in prior
years.
(5) Any state agency required to remit payments pursuant to
paragraphs (1) and (2) may request a waiver of those requirements
from the department. The department may grant a waiver if it
determines that there will not be a negative impact on the interest
earnings of the General Fund. If there is a negative impact to the
General Fund, the department may grant a waiver if the requesting
state agency follows procedures designated by the department to
mitigate the impact to the General Fund.
(e) Any employer not required to make payment pursuant to
subdivision (d) of this section may elect to make payment by
electronic funds transfer in accordance with Section 13021.5 under
the following conditions:
(1) The election shall be made in a form, and shall contain
information, as prescribed by the director, and shall be subject to
approval by the department.
(2) If approved, the election shall be effective on the date
specified in the notification to the employer of approval.
(3) The election shall be operative from the date specified in the
notification of approval, and shall continue in effect until
terminated by the employer or the department.
(4) Funds remitted by electronic funds transfer pursuant to this
subdivision shall be deemed complete in accordance with subdivision
(d) or as deemed appropriate by the director to encourage use of this
payment method.
(f) Notwithstanding Section 1112, no interest or penalties shall
be assessed against any employer who remits at least 95 percent of
the amount required by subdivision (c) or (d) if the failure to remit
the full amount is not willful and any remaining amount due is paid
with the next payment. The director may allow any employer to submit
the amounts due from multiple locations upon a showing that those
submissions are necessary to comply with subdivision (c) or (d).
(g) The department may, if it believes that action is necessary,
require any employer to make the report or return required by this
section and pay to it the tax deducted and withheld at any time, or
from time to time but no less frequently than provided for in
subdivision (a).
(h) Any employer required to withhold any tax and who is not
required to make payment under subdivision (c) shall remit the total
amount of income tax withheld during each month of each calendar
quarter, on or before the 15th day of the subsequent month if the
income tax withheld for any of the three months or, cumulatively for
two or more months, is three hundred fifty dollars ($350) or more.
(i) For purposes of subdivisions (a), (c), and (h), payment is
deemed complete when it is placed in a properly addressed envelope,
bearing the correct postage, and it is deposited in the United States
mail.
(j) (1) In addition to the withholding report, quarterly return,
and report of wages described in subdivision (a), each employer shall
file with the director an annual reconciliation return showing the
amount required to be withheld under Section 13020, and any other
information the director shall prescribe. This annual reconciliation
return shall be due on the first day of January following the close
of the prior calendar year and shall become delinquent if not filed
on or before the last day of that month.
(2) The requirement to file the annual reconciliation return for
the prior calendar year under this subdivision shall not apply to the
2012 calendar year and thereafter.
(k) The requirement in subdivision (a) to file a quarterly return
shall begin with the first calendar quarter of the 2011 calendar
year.
13021.5. (a) "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, Fedwire, or by other specific electronic funds transfer
methods approved in advance by the department.
(b) "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 and/or bank accounts
and which authorizes an electronic transfer of funds between those
banks or bank accounts.
(c) "Automated clearinghouse debit" means a transaction in which
the state, through its designated depository bank, originates an
automated clearinghouse transaction debiting the employer's bank
account and crediting the state's bank account for the amount of tax.
Banking costs incurred for the automated clearinghouse debit
transaction shall be paid by the state.
(d) "Automated clearinghouse credit" means an automated
clearinghouse transaction in which the employer through its own bank,
originates an entry crediting the state's bank account and debiting
its own bank account. Banking costs incurred for the automated
clearinghouse credit transaction charged to the employer and to the
state shall be paid by the employer.
(e) "Fedwire" means any transaction originated by the employer and
utilizing the national electronic payment system to transfer funds
through the federal reserve banks, pursuant to which the employer
debits its own bank account and credits the state's bank account.
Electronic funds transfer payments may be made by Fedwire only if
prior approval is obtained from the department and payment cannot,
for good cause, be made pursuant to subdivision (a). Banking costs
incurred for the Fedwire transaction charged to the employer and to
the state shall be paid by the employer.
(f) "Banking day" means any day other than a Saturday, Sunday, or
banking holiday as recognized by the Internal Revenue Service.
(g) "Settlement date" means the date on which an exchange of funds
with respect to an entry is reflected on the books of the Federal
Reserve Bank.
(h) For the purposes of Section 13021, the "cumulative average
payment" means the cumulative dollar amount of deposits divided by
the number of payments submitted during a given period. For the
purposes of this section, the "cumulative average payment" may also
be defined as a single annual deposit, when only one payment is made
during the 12-month period ending June 30.
13022. In determining the amount to be deducted and withheld under
Section 13020, the wages may, at the election of the employer, be
computed to the nearest dollar.
13023. The department may, by regulation, permit employers to
estimate the wages which will be paid to any employee in any quarter
of the calendar year, to determine the amount to be deducted and
withheld upon each payment of wages to such employee during such
quarter as if the appropriate average of the wages so estimated
constituted the actual wages paid, and to deduct and withhold upon
any payment of wages to such employee, during such quarter such
amount as may be necessary to adjust the amount actually deducted and
withheld upon the wages of such employee during such quarter to the
amount that would be required to be deducted and withheld during such
quarter if the payroll period of the employee were quarterly.
13024. The department may provide by authorized regulation, under
such conditions and to such extent as it deems proper, for
withholding in addition to that otherwise required under Section
13020 in cases in which the employer and employee agree to such
additional withholding. Such additional withholding shall for all
purposes be considered a tax required to be deducted and withheld
under this division.
13025. In the case of remuneration paid in any medium other than
cash for services performed by an individual as a retail salesperson
for a person where the service performed by such individual for such
person is ordinarily performed for remuneration solely by way of cash
commission an employer shall not be required to deduct or withhold
any tax under this division with respect to such remuneration, if
such employer files with the department such information with respect
to such remuneration as the department may prescribe by regulation.
13026. An employer shall not be required to deduct and withhold any
tax under this division upon a payment of wages (except wages exempt
from federal income tax but not exempt under this division) to an
employee if there is in effect with respect to such payment a
withholding exemption certificate, in such form and containing such
other information as the department may prescribe, furnished to the
employer by the employee certifying that the employee--
(a) Incurred no liability for federal income tax imposed under
subtitle A of the Internal Revenue Code of 1954 for his or her
preceding taxable year, and
(b) Anticipates that he or she will incur no liability for federal
income tax imposed under subtitle A of the Internal Revenue Code of
1954 for his or her current taxable year.
13027. In the case of tips which constitute wages, subdivision (a)
of Section 13020 shall be applicable only to such tips as are
included in a written statement furnished to the employer pursuant to
Section 13055, and only to the extent that the tax can be deducted
and withheld by the employer, at or after the time such statement is
so furnished and before the close of the calendar year in which such
statement is furnished, from such wages of the employee (excluding
tips, but including funds turned over by the employee to the employer
for the purpose of such deduction and withholding) as are under the
control of the employer. An employer who is furnished by an employee
a written statement of tips (received in a calendar month) pursuant
to Section 13055 to which paragraph (2) of subdivision (n) of Section
13009 is applicable may deduct and withhold the tax with respect to
such tips from any wages of the employee (excluding tips) under his
or her control, even though at the time such statement is furnished
the total amount of the tips included in statements furnished to the
employer as having been received by the employee in such calendar
month in the course of his or her employment by the employer is less
than twenty dollars ($20). Such tax shall not at any time be deducted
and withheld in any amount which exceeds the aggregate of such wages
and funds.
13028. (a) For purposes of this division (and so much of Part 10
(commencing with Section 17001) and Part 10.2 (commencing with
Section 18401) of Division 2 of the Revenue and Taxation Code as
relates to this division) pensions, annuities, and other deferred
income, as described in Section 3405 of the Internal Revenue Code,
are wages and subject to withholding under this division. Amounts
withheld shall be treated as if the amounts are withheld by an
employer for a payroll period and only amounts withheld shall be
reported to the department pursuant to Section 1088 and Section
13021.
(b) If an individual makes an election under Section 3405(a)(2) or
Section 3405(b)(2) of the Internal Revenue Code not to have tax
withheld, that election shall apply to withholding under this
division, unless the individual elects, with the consent of the
payer, to have those payments subject to withholding under this
division. If an individual has not made an election under Section
3405(a)(2) or Section 3405(b)(2) of the Internal Revenue Code, that
individual may elect to exclude those payments from withholding under
this division. Elections provided in this subdivision shall be made
pursuant to regulations of the director.
(c) Where Section 3405 of the Internal Revenue Code provides that
tables or other computational procedures shall be prescribed by the
Secretary of the Treasury, for the purposes of this division, any of
the following amounts may be withheld, upon election of the payer:
(1) An amount determined by the method prescribed under Section
13020.
(2) A designated dollar amount as requested by the payee.
(3) Ten percent of the amount of federal withholding computed
pursuant to Section 3405 of the Internal Revenue Code.
(d) Where the amount of withholding computed pursuant to
subdivision (c) is less than ten dollars ($10) per month, the payer
shall not be required to withhold that amount.
(e) This section shall not apply to pensions, annuities, and other
deferred income of payees with addresses outside this state, as
shown on the most current records of the payer.
(f) The department shall, in consultation with the affected payers
and payees, issue regulations to implement this section.
Those regulations shall provide for delay (but not beyond July 1,
1987) of the application of this section with respect to any payer or
class of payers until that time as the payers are able to comply
without undue hardship with the requirements of this section. In that
case, no retroactive compliance shall be required.
13028.1. If the director determines that nonpayment of tax by a
nonresident under the income tax laws of this state may occur, the
director shall notify the payer of payments described in subdivision
(a) of Section 13028 that withholding shall be made from those
payments. Upon notice from the director, the payer shall withhold
from those payments as if they were subject to Section 13020. The
director shall also notify the payee that withholding has been
ordered pursuant to this section, and the reason for his or her
determination that nonpayment of tax may occur.
13028.5. (a) For purposes of this division (and so much of Part 10
(commencing with Section 17001) and Part 10.2 (commencing with
Section 18401) of Division 2 of the Revenue and Taxation Code as
relates to this division) any supplemental unemployment compensation
benefit paid to an individual shall be treated as if it were a
payment of wages by an employer to an employee for a payroll period.
(b) For purposes of subdivision (a), "supplemental unemployment
compensation benefits" means amounts which are paid to an employee,
pursuant to a plan to which the employer is a party, because of an
employee's involuntary separation from employment (whether or not
that separation is temporary), resulting directly from a reduction in
force, the discontinuance of a plant or operation, or other similar
conditions, but only to the extent those benefits are includable in
the employee's gross income.
13028.6. (a) For purposes of this division (and so much of Part 10
(commencing with Section 17001) and Part 10.2 (commencing with
Section 18401) of Division 2 of the Revenue and Taxation Code as
relates to this division), any payment to an individual of sick pay
which does not constitute wages (determined without regard to this
subdivision), if at the time the payment is made a request that such
sick pay be subject to withholding under this division is in effect,
shall be treated as if it were a payment of wages by an employer to
an employee for a payroll period.
(b) For purposes of this subdivision, "sick pay" means any amount
which satisfies both of the following:
(1) Is paid to an employee pursuant to a plan to which the
employer is a party.
(2) Constitutes remuneration or a payment in lieu of remuneration
for any period during which the employee is temporarily absent from
work on account of sickness or personal injuries.
(c) If a payee makes a request that any sick pay be subject to
withholding under this chapter, the amount to be deducted and
withheld under this chapter from any payment to which that request
applies shall be an amount (not less than a minimum amount determined
by the Franchise Tax Board) specified by the payee in that request.
The amount deducted and withheld with respect to a payment which is
greater or less than a full payment shall bear the same relation to
the specified amount as that payment bears to a full payment.
(1) A request that any sick pay be subject to withholding under
this chapter shall satisfy all of the following:
(A) Shall be made by the payee in writing to the person making the
payments and shall contain the social security number of the payee.
(B) Shall specify the amount to be deducted and withheld from each
full payment.
(C) Shall take effect with respect to payments made more than
seven days after the date on which that request is furnished to the
payer, or as the department shall by regulations prescribe. That
request may be changed or terminated by furnishing to the person
making the payments a written statement of change or termination
which shall take effect in the same manner as provided in the
preceding sentence. At the election of the payer, any such request
(or statement of change or revocation) may take effect earlier than
as provided in this subparagraph.
(2) Any sick pay paid pursuant to a collective bargaining
agreement between employee representatives and one or more employers
which contains a provision specifying that this paragraph is to apply
to sick pay paid pursuant to that agreement and contains a provision
for determining the amount to be deducted and withheld from each
payment of that sick pay as follows:
(A) The requirement of paragraph (3) of subdivision (a) that a
request for withholding be in effect shall not apply.
(B) Except as provided in Section 13026, the amounts to be
deducted and withheld under this chapter shall be determined in
accordance with that agreement.
The preceding sentence shall not apply with respect to sick pay
paid pursuant to any agreement to any individual, unless the social
security number of that individual is furnished to the payer and the
payer is furnished with that information as is necessary to determine
whether the payment is pursuant to the agreement and to determine
the amount to be deducted and withheld.
13029. The department may by authorized regulations provide for
withholding--
(a) From remuneration for services performed by an employee for
his or her employer which (without regard to this section) does not
constitute wages, and
(b) From any other type of payment with respect to which the
department finds that withholding would be appropriate under the
provisions of this division,
if the employer and the employee, or in the case of any other type
of payment the person making and the person receiving the payment,
agree to the withholding. The agreement shall be made in the form and
manner as the department may by authorized regulations provide. For
purposes of this division (and so much of Part 10 (commencing with
Section 17001) and Part 10.2 (commencing with Section 18401) of
Division 2 of the Revenue and Taxation Code as relates to this
division) remuneration or other payments with respect to which the
agreement is made shall be treated as if they were wages paid by an
employer to an employee to the extent that the remuneration is paid
or other payments are made during the period for which the agreement
is in effect.
13030. If wages are paid with respect to a period which is not a
payroll period, the amount to be deducted and withheld shall be that
applicable in the case of a miscellaneous payroll period containing a
number of days, including Sundays and holidays, equal to the number
of days in the period with respect to which such wages are paid. In
any case in which wages are paid by an employer without regard to any
payroll period or other period, the amount to be deducted and
withheld shall be that applicable in the case of a miscellaneous
payroll period containing a number of days equal to the number of
days, including Sundays and holidays, which have elapsed since the
date of the last payment of such wages by such employer during the
calendar year, or the date of commencement of employment with such
employer during such year, or January 1st of such year, whichever is
the later. In any case in which the period of time described, or the
time prescribed in the preceding sentence in respect of any wages, is
less than one week, the department may by authorized regulation
permit an employer, in computing the tax required to be deducted and
withheld, to use the excess of the aggregate of the wages paid to the
employee during the calendar week over the withholding exemption
allowed by Section 13020 for a weekly payroll period.
13031. If the remuneration paid by an employer to an employee for
services performed during one-half or more of any payroll period of
not more than 31 consecutive days constitutes wages, all the
remuneration paid by such employer to such employee for such period
shall be deemed to be wages, but if the remuneration paid by an
employer to an employee for services performed during more than
one-half of any such payroll period does not constitute wages, then
none of the remuneration paid by such employer to such employee for
such period shall be deemed to be wages.