I recently received a Notice of amount due from EDD for penalties and interest for a supposedly late payment. I initiated a payment on 1/31/24 for Q4 2023 taxes due. According to the EDD website:
https://edd.ca.gov/en/payroll_taxes/Electronic_Funds_Transfer/
Automated Clearing House (ACH) Debit:
Make a payment by authorizing the State of California to electronically debit your bank account.
- Payment transactions must be completed before 3 p.m., Pacific Time (PT), for the funds to settle on the next business day.
- There is no fees to use this method.
I read this as meaning the e-payment must be accepted by 3PM 1/31/24. In this case the audit trail indicates that the payment was "successfully processed by the tax agency" at 1:15 PM 1/31/24. As stated above, this cutoff is "for the funds to settle on the next business day", which they did on 2/3 per the EDD call center.
Two different agents told me the funds had to SETTLE by 1/31/24 3PM to be on time. I believe this is wrong, assuming that QuickBooks payroll is initiating an ACH DEBIT authorizing EDD to debit my account. If I was initiating the payment through my bank as an ACH CREDIT, then the following would apply:
Automated Clearing House (ACH) Credit:
Make a payment by instructing your bank to debit your bank account and transfer those funds to the State’s bank account.
- Contact your bank to determine when you should start your payment so that it will settle into the State’s bank account on time.
- Check with your bank for any fees.
I am I correct in my thinking and EDD is falsely penalizing me?
This has happened to me before, but my payroll is small enough that I simply brush it off and pay the fine. This time it is really bugging me and I am following up out of principal. I can't think of any tax agency that penalizes you if you initiate payment to them on the due date via ACH DEBIT. CDTFA does it. IRS does it. The only agency that is penalizing for this is EDD!
Please help!
