As states work to accelerate revenue and trim costs from their budgets, more and more are adopting the required use of automation to process and collect tax forms and the related payments. What these requirements don’t often seem to address is that not every taxpayer makes use of technology and the internet.

Massachusetts adopted mandatory electronic filing and paying of income tax extensions for certain taxpayers as early as 2004. Originally the qualifying thresholds were set high enough that only the largest companies were required to comply. However, every year since, the thresholds have been lowered and expanded. Currently the mandate is to electronically file and pay extensions in Massachusetts for individuals remitting either a zero payment or more than $4,999 with their extension request. For businesses the threshold is $100,000 in gross sales or a payment of $5,000 or greater. Massachusetts is currently imposing a penalty of $100 for failure to comply with their electronic payment mandates.

In 2009, CA adopted tax statutes that require all payments be made electronically once a business or individual taxpayer’s total tax for the year exceeds $80,000 or their estimated and extension payments exceeds $20,000. California also imposes penalties for failure to comply with electronic payment requirements.

More recently, the State of New York began requiring businesses to make estimated tax payments electronically as of December 1, 2011. This rule applies to all but the smallest businesses. And much like Massachusetts and California, there are penalties that can be imposed on the taxpayer and or tax preparer for failure to comply. Currently those are $50 for failure to file electronically, another $50 for failure to pay electronically, and 5% per month on any tax unpaid after the original due date of the return (maximum of 25%).

These are just some of the income tax states requiring electronic filing and payments. There are many others such as Texas, West Virginia, and Florida with similar requirements and several others, such as Louisiana which are in the process of adopting them. And regardless of each state’s income tax requirements, almost all states now have mandatory filing and paying of other types of tax such as payroll and sales taxes.

If you have questions or concerns about any of these types of payments, please contact a member of our tax services team and we will be glad to assist you in navigating this ever changing landscape.