California / FTB

FTB Mandatory e-Pay: The Penalty and How to Stop It (2026)

By Angeline Balsitis, EA · Reviewed by Melissa Ly, Chief Tax Officer · Updated June 8, 2026 · Editorial Standards

Stuck with FTB penalties piling up?

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Why you got the FTB mandatory e-pay penalty

California's Franchise Tax Board (FTB) is the state agency that collects personal income tax. Under state law (Revenue & Taxation Code section 19011), certain higher-income taxpayers are required to make all of their payments to the FTB electronically. If you owe the mandatory e-pay penalty, it means you crossed one of the thresholds, then later sent a payment by paper check or money order instead.

You become subject to the rule the moment either of these happens:

• You make an estimated tax or extension payment over $20,000, or
• You file an original return showing a total tax liability over $80,000 for any tax year.

Here's the part that surprises people: once you trip either threshold, the requirement applies to every payment after that — no matter how small. A $400 balance due paid by check the following year still draws the penalty. The FTB explains the rule on its mandatory e-payments page.

How much the penalty actually costs

The penalty is 1% of the amount you paid by a non-electronic method. It's charged on top of your tax — and it has nothing to do with whether your payment was on time. You can pay early, pay in full, and still get hit, simply because you used a check.

Here's a concrete example. Say you owe $45,000 with your California return and you mail a check for the full amount on the due date:

• Tax paid: $45,000
• Mandatory e-pay penalty (1%): $450
• Total cost of using a check instead of Web Pay: $450

That $450 buys you nothing. The same payment made electronically — for free, through the FTB's Web Pay — would have cost zero. This is one of the most avoidable penalties in California tax. If you also have other FTB notices stacking up, our FTB Notice Decoder can help you sort out what each one means.

What happens if you keep paying by check

The mandatory e-pay penalty isn't a one-time event. It recurs on each non-electronic payment, and the consequences build:

1. First check payment — 1% penalty added to your balance. Your account is now flagged as subject to the rule.
2. Each later check — another 1% penalty, every single time, even on tiny balances.
3. Unpaid penalties — if you don't pay the penalties, they accrue interest and roll into your overall FTB balance like any other tax debt.
4. Collection — left unpaid long enough, an FTB balance can lead to a California state tax lien, refund interception, and wage garnishment — the standard FTB collection track.

None of this is dramatic on its own. But it's pure waste — money paid for using the wrong payment button. The fix costs nothing.

How to stop the FTB e-pay penalty for good

Stopping the penalty has two parts: pay electronically from now on, and tell the FTB to either waive or discontinue the requirement.

Pay electronically going forward

Any of these methods counts as electronic and avoids the 1% charge:

• Web Pay — the FTB's free service that pulls directly from your bank account. This is the simplest option. You can set it up on the FTB payment options page.
• Electronic funds withdrawal — schedule the payment when you e-file your return.
• Credit or debit card — works, though a third-party processing fee applies.
• Bank bill pay — through your own bank's online system.

File Form 4107 to waive or discontinue the rule

The requirement doesn't expire on its own. To end it, you file FTB Form 4107, Mandatory e-Pay Election to Discontinue or Waiver Request. Use it to:

• Discontinue the requirement if your tax liability and payments have stayed below the $80,000 and $20,000 thresholds, or
• Request a waiver if you had a one-time spike that pushed you over (for example, a large capital gain in a single year) and you don't expect it to repeat.

You can also ask the FTB to abate a penalty already charged if you had reasonable cause — a good-faith reason for paying by check. If reasonable-cause relief is on the table, our guide to FTB penalty abatement and reasonable cause walks through what California accepts.

How to respond, step by step

1. Confirm why you're subject. Check whether you made a payment over $20,000 or filed a return with tax over $80,000. Your FTB account online shows your payment history.
2. Switch your payment method to electronic immediately — set up Web Pay before your next payment is due.
3. If a penalty was charged, request abatement in writing with your reasonable-cause explanation, or call the FTB to discuss it.
4. File Form 4107 to request a waiver or to discontinue the requirement if you now fall below the thresholds.
5. Keep records. Save your Web Pay confirmations and your Form 4107 submission, so you can prove compliance if a penalty is ever charged in error.

FTB mandatory e-pay questions, answered

This guide is general information, not tax or legal advice for your specific situation. Eligibility for IRS programs depends on individual facts and circumstances; no outcome is guaranteed.

Related guides: FTB Notice Decoder: What Your California Franchise Tax Board Notice Means · FTB Offer in Compromise: How It Works, Who Qualifies, and How to Apply · FTB Payment Plan: How to Set One Up in California · FTB Penalty Abatement & Reasonable Cause in California · FTB Refund & Lottery Intercept: Why California Took Your Refund