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California law requires business entities that prepare an original or amended return using tax preparation software to e-file returns. Failure to e-file will be penalized if the failure to e-file is due to willful neglect and not reasonable cause.

The penalty is $100 for the initial e-file failure, and $500 for each subsequent failure. Business entities may annually request an e-filing waiver if they can show the inability to e-file is due to, but not limited to:

  • Technology constraints
  • Undue financial burden
  • Other circumstances that constitute reasonable cause and not willful neglect.
You may submit a waiver to the state of California prior to, or up to 15 days after filing the tax return. You may submit the Business Entity e-file Waiver Request Form via the California FTB website.


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