Code Section Group

Unemployment Insurance Code - UIC

DIVISION 6. WITHHOLDING TAX ON WAGES [13000 - 13101]

  ( Division 6 added by Stats. 1980, Ch. 1007, Sec. 64. )

CHAPTER 1. General Provisions [13000 - 13019]
  ( Chapter 1 added by Stats. 1980, Ch. 1007, Sec. 64. )

13000.
  

The department shall have the powers and duties necessary to administer the reporting, collection, refunding to the employer, and enforcement of taxes required to be withheld by employers pursuant to Section 13020, except as otherwise provided by this division.

(Added by Stats. 1980, Ch. 1007, Sec. 64. Operative July 1, 1981, by Sec. 67 of Ch. 1007.)

13001.
  

The definitions set forth in Sections 126, 127, 129, 133, 134, and 144 shall apply to this division.

(Added by Stats. 1980, Ch. 1007, Sec. 64. Operative July 1, 1981, by Sec. 67 of Ch. 1007.)

13002.
  

The following provisions of this code shall apply to any amount required to be deducted, reported, and paid to the department under this division:

(a) Sections 301, 305, 306, 310, 311, 317, and 318, relating to general administrative powers of the department.

(b) Sections 403 to 413, inclusive, Section 1336, and Chapter 8 (commencing with Section 1951) of Part 1 of Division 1, relating to appeals and hearing procedures.

(c) Sections 1110.6, 1111, 1111.5, 1112, 1112.1, 1112.5, 1113, 1113.1, 1114, 1115, 1116, and 1117, relating to the making of returns or the payment of reported contributions.

(d) Article 8 (commencing with Section 1126) of Chapter 4 of Part 1 of Division 1, relating to assessments.

(e) Article 9 (commencing with Section 1176), except Section 1176, of Chapter 4 of Part 1 of Division 1, relating to refunds and overpayments.

(f) Article 10 (commencing with Section 1206) of Chapter 4 of Part 1 of Division 1, relating to notice.

(g) Article 11 (commencing with Section 1221) of Chapter 4 of Part 1 of Division 1, relating to administrative appellate review.

(h) Article 12 (commencing with Section 1241) of Chapter 4 of Part 1 of Division 1, relating to judicial review.

(i) Chapter 7 (commencing with Section 1701) of Part 1 of Division 1, relating to collections.

(j) Chapter 10 (commencing with Section 2101) of Part 1 of Division 1, relating to violations.

(Amended by Stats. 2017, Ch. 117, Sec. 9. (AB 1695) Effective January 1, 2018.)

13003.
  

(a) Except where the context otherwise requires, the definitions set forth in this chapter, and in addition the definitions and provisions of the Personal Income Tax Law referred to and hereby incorporated by reference as set forth in the following provisions of the Revenue and Taxation Code, shall apply to and govern the construction of this division:

(1) “Corporation” as defined by Section 17009.

(2) “Fiduciary” as defined by Section 17006.

(3) “Fiscal year” as defined by Section 17011.

(4) “Foreign country” as defined by Section 17019.

(5) “Franchise Tax Board” as defined by Section 17003.

(6)  “Spouse” as defined by Section 17021.

(7) “Individual” as defined by Section 17005.

(8) “Military or naval forces” as defined by Section 17022.

(9) “Nonresident” as defined by Section 17015.

(10) “Partnership” as defined by Section 17008.

(11) “Person” as defined by Section 17007.

(12) “Resident” as defined by Sections 17014 and 17016.

(13) “State” as defined by Section 17018.

(14) “Taxable year” as defined by Section 17010.

(15) “Taxpayer” as defined by Section 17004.

(16) “Trade or business” as defined by Section 17020.

(17) “United States” as defined by Section 17017.

(b) The provisions of Part 10 (commencing with Section 17001) and Part 10.2 (commencing with Section 18401) of Division 2 of the Revenue and Taxation Code, relating to the following items, are hereby incorporated by reference and shall apply to and govern construction of this division:

(1) Trade or business expense (Article 6 (commencing with Section 17201) of Chapter 3 of Part 10).

(2) Deductions for retirement savings (Article 6 (commencing with Section 17201) of Chapter 3 of Part 10).

(3) Distributions of property by a corporation to a shareholder (Chapter 4 (commencing with Section 17321) of Part 10).

(4) Deferred compensation (Chapter 5 (commencing with Section 17501) of Part 10).

(5) Partners and partnerships (Chapter 10 (commencing with Section 17851) of Part 10).

(6) Gross income of nonresident taxpayers (Chapter 11 (commencing with Section 17951) of Part 10).

(7) Postponement of the time for certain acts by individuals in or in support of the Armed Forces (Article 3 (commencing with Section 18621) of Chapter 2 of Part 10.2).

(8) Disclosure of information (Article 2 (commencing with Section 19542) of Chapter 7 of Part 10.2). For this purpose “Franchise Tax Board” as used therein shall mean the Employment Development Department in respect to information obtained in the administration of this division.

(Amended by Stats. 2016, Ch. 50, Sec. 116. (SB 1005) Effective January 1, 2017.)

13004.
  

“Employee” means a resident individual who receives remuneration for services performed within or without this state or a nonresident individual who receives remuneration for services performed within this state and includes an officer, employee, or elected official of the United States, a state, territory, or any political subdivision thereof, or any agency or instrumentality of any one or more of the foregoing. “Employee” also includes an officer of a corporation.

Whether an individual provides equipment in the performance of services for remuneration shall not be considered in a determination of whether that individual is an employee.

(Amended by Stats. 1986, Ch. 847, Sec. 15.)

13004.1.
  

“Employee” does not include any individual if all of the following conditions exist:

(a) The individual is licensed pursuant to the provisions of Part 1 (commencing with Section 10000) of Division 4 of the Business and Professions Code and is performing services in the capacity of a licensee, or the individual is engaged in the trade or business of primarily in-person demonstration and sales presentation of consumer products, including services or other intangibles, in the home or sales to any buyer on a buy-sell basis, a deposit-commission basis, or any similar basis, for resale by the buyer or any other person in the home or otherwise than in a retail or wholesale establishment.

(b) Substantially all of the remuneration (whether or not paid in cash) for the services performed by that individual is directly related to sales or other output (including the performance of services) rather than to the number of hours worked by that individual.

(c) The services performed by the individual are performed pursuant to a written contract between that individual and the person for whom the services are performed and the contract provides that the individual will not be treated as an employee with respect to those services for state tax purposes.

(Amended by Stats. 1995, Ch. 541, Sec. 8. Effective January 1, 1996.)

13004.5.
  

(a) “Employee” also means any individual who is an employee pursuant to Section 2750.5 of the Labor Code, of a person who holds a valid state contractor’s license pursuant to Chapter 9 (commencing with Section 7000) of Division 3 of the Business and Professions Code.

(b) When subdivision (a) does not apply, “employee” shall also mean any individual who is an employee, pursuant to Section 2750.5 of the Labor Code, of a person who is required to obtain a valid state contractor’s license pursuant to Chapter 9 (commencing with Section 7000) of Division 3 of the Business and Professions Code.

(Added by Stats. 1990, Ch. 719, Sec. 5.)

13004.6.
  

“Employee” does not include any member of a limited liability company that is treated as a partnership for federal income tax purposes.

(Added by Stats. 2014, Ch. 122, Sec. 1. (SB 1131) Effective January 1, 2015.)

13005.
  

(a) “Employer” means any individual, person, corporation, association, partnership, or limited liability company, or any agent thereof, doing business in this state, deriving income from sources within this state, or in any manner whatsoever subject to the laws of this state, the State of California or any political subdivision or agency thereof, including the Regents of the University of California, any city organized under a freeholders’ charter, or any political body not a subdivision or agency of the state, and any person, officer, employee, department, or agency thereof, making payment of wages to employees for services performed within this state, except as provided in subdivision (b).

(b) If the employer, as defined in subdivision (a), for whom the employee performs or performed the service does not have control of the payment of wages for such services, “employer” (except for purposes of Section 13009) means the person having control of the payment of such wages, whether or not the person having control of the payment of such wages is subject to the jurisdiction of the laws of this state.

(Amended by Stats. 1994, Ch. 1200, Sec. 91. Effective September 30, 1994.)

13005.7.
  

An employment agency, as defined in paragraph (3) of subdivision (a) or (h) of Section 1812.501 of the Civil Code shall not be deemed the employer of the domestic worker for whom it procures, offers, refers, provides, or attempts to provide work if all of the factors set forth in Section 687.2 exist.

(Added by Stats. 1993, Ch. 1275, Sec. 4. Effective January 1, 1994.)

13006.
  

“Gross income” means all compensation for services including fees, commissions, and similar items, except as otherwise provided by this division. “Gross income” shall specifically include those items relating to compensation specified by Article 2 (commencing with Section 17081) of, and shall specifically exclude those items relating to compensation specified by Article 3 (commencing with Section 17131) of, Chapter 3 of Part 10 of Division 2 of the Revenue and Taxation Code.

(Amended by Stats. 1986, Ch. 847, Sec. 16.)

13007.
  

“Miscellaneous payroll period” means a payroll period other than a daily, weekly, biweekly, semimonthly, monthly, quarterly, semiannual, or annual payroll period.

(Added by Stats. 1980, Ch. 1007, Sec. 64. Operative July 1, 1981, by Sec. 67 of Ch. 1007.)

13008.
  

“Payroll period” means a period for which a payment of wages is ordinarily made to the employee by his or her employer.

(Added by Stats. 1980, Ch. 1007, Sec. 64. Operative July 1, 1981, by Sec. 67 of Ch. 1007.)

13009.
  

“Wages” means all remuneration, other than fees paid to a public official, for services performed by an employee for his or her employer, including all remuneration paid to a nonresident employee for services performed in this state, and the cash value of all remuneration paid in any medium other than cash, except as provided by this section. “Wages” includes tips received by an employee in the course of his or her employment. The wages shall be deemed to be paid at the time a written statement including tips is furnished to the employer pursuant to Section 13055 or, if no statement including those tips is so furnished, at the time received. “Wages” includes compensation, that is deductible under Section 162 of the Internal Revenue Code, paid to a member of a limited liability company filing a federal corporate income tax return.

“Wages” shall not include remuneration paid under any of the following conditions:

(a) For agricultural labor, as defined in subdivision (g) of Section 3121 of the Internal Revenue Code.

(b) For domestic service in a private home, local college club, or local chapter of a college fraternity or sorority.

(c) For service not in the course of the employer’s trade or business performed in any calendar quarter by an employee, unless the cash remuneration paid for that service is fifty dollars ($50) or more and the service is performed by an individual who is regularly employed by the employer to perform the service. For purposes of this subdivision, an individual shall be deemed to be regularly employed by an employer during a calendar quarter only if either of the following conditions is met:

(1) On each of some 24 days during the quarter, the individual performs for the employer for some portion of the day service not in the course of the employer’s trade or business.

(2) The individual was regularly employed, as determined under paragraph (1), by the employer in the performance of the service during the preceding calendar quarter.

(d) For services by a citizen or resident of the United States for a foreign government or an international organization.

(e) For services performed by a nonresident alien individual as designated by regulations prescribed by the department.

(f) For services performed by a duly ordained, commissioned, or licensed minister of a church in the exercise of his or her ministry or by a member of a religious order in the exercise of duties required by the order.

(g) (1) For services performed by an individual under the age of 18 years in delivery or distribution of newspapers or shopping news, not including delivery or distribution to any point for subsequent delivery or distribution.

(2) For services performed by an individual in, and at the time of, the sale of newspapers or magazines to ultimate consumers, under an arrangement under which the newspapers or magazines are to be sold by him or her at a fixed price, his or her compensation being based on the retention of the excess of the price over the amount at which the newspapers or magazines are charged to him or her whether or not he or she is guaranteed a minimum amount of compensation for the services, or is entitled to be credited with the unsold newspapers or magazines turned back.

(h) For services not in the course of the employer’s trade or business, to the extent paid in any medium other than cash.

(i) To, or on behalf of, an employee or his or her beneficiary under any of the following situations:

(1) From or to a trust which is exempt from tax under Section 17631 of the Revenue and Taxation Code at the time of payment, unless the payment is made to an employee of the trust as remuneration for services rendered as an employee and not as a beneficiary of the trust.

(2) Under or to an annuity plan which, at the time of payment, is a plan qualified pursuant to Chapter 5 (commencing with Section 17501) of Part 10 of Division 2 of the Revenue and Taxation Code.

(3) Under or to a bond purchase plan which, at the time of payment, is a bond purchase plan qualified pursuant to Chapter 5 (commencing with Section 17501) of Part 10 of Division 2 of the Revenue and Taxation Code.

(4) For a payment which qualifies for deduction by an employee pursuant to Section 219 of the Internal Revenue Code if, at the time of payment, it is reasonable to believe that the employee will be entitled to a deduction under that section for payment.

(5) Under a cafeteria plan (within the meaning of Section 125 of the Internal Revenue Code).

(j) To a master, officer, or any other seaman who is a member of a crew on a vessel engaged in foreign, coastwise, intercoastal, interstate, or noncontiguous trade.

(k) Pursuant to any provision of law other than Section 5(c) of the Peace Corps Act (22 U.S.C. Sec. 2504(c)) or 6(1) of the Peace Corps Act (22 U.S.C. Sec. 2505(1)), for service performed as a volunteer or volunteer leader within the meaning of that act.

(l) In the form of group-term life insurance on the life of an employee.

(m) To or on behalf of an employee, and to the extent that, at the time of the payment of remuneration it is reasonable to believe that a corresponding deduction is allowable for moving expenses pursuant to Article 6 (commencing with Section 17201) of Chapter 3 of Part 10 of Division 2 of the Revenue and Taxation Code.

(n) (1) As tips in any medium other than cash.

(2) As cash tips to an employee in any calendar month in the course of his or her employment by an employer, unless the amount of the cash tips is twenty dollars ($20) or more.

(o) For service performed by an individual on a boat engaged in catching fish or other forms of aquatic animal life under an arrangement with the owner or operator of the boat pursuant to which all of the following apply:

(1) The individual does not receive any cash remuneration, other than as provided in paragraph (2).

(2) The individual receives a share of the boat’s (or the boats’ in the case of a fishing operation involving more than one boat) catch of fish or other forms of aquatic animal life or a share of the proceeds from the sale of the catch.

(3) The amount of the individual’s share depends on the amount of the boat’s (or the boats’ in the case of a fishing operation involving more than one boat) catch of fish or other forms of aquatic animal life.

This subdivision shall apply only where the operating crew of the boat (or each boat from which the individual receives a share in the case of a fishing operation involving more than one boat) is normally made up of fewer than 10 individuals.

(p) For any medical care reimbursement made to, or for the benefit of, an employee under a self-insured medical reimbursement plan pursuant to Section 105(h)(6) of the Internal Revenue Code.

(q) To, or on behalf of, an employee to the extent not includable in gross income pursuant to Section 13006.

(r) For services to which Section 633 applies.

(Amended by Stats. 2017, Ch. 117, Sec. 10. (AB 1695) Effective January 1, 2018.)

13009.5.
  

(a) For purposes of the report required by subdivision (a) of Section 1088 and the statement required by Section 13050, “wages subject to personal income tax” means all of the following:

(1) Remuneration defined as wages by Section 13009, except that in the case of tips received by an employee in the course of his or her employment, the amounts shall include only those tips included in statements furnished to the employer, pursuant to Section 13055.

(2) Remuneration described in subdivisions (a), (b), (f), and (l) of Section 13009, to the extent included in gross income.

(3) Payments made by a third party for sick pay as specified in Section 931.5.

(A) Any employer who receives a report of wages from a third-party payer as provided for in subdivisions (a) and (b) of Section 931.5 shall report those wages to the department as required under paragraph (2) of subdivision (a) of Section 1088.

(B) Any third-party payer described in Section 931.5 who fails to report wages to an employer as provided for in that section shall report those wages to the department as required under paragraph (2) of subdivision (a) of Section 1088.

(b) (1) A person or entity shall not be required to register with the Employment Development Department solely for the purpose of reporting wages subject to personal income tax pursuant to Section 1088 unless that registration is otherwise required by this code.

(2) A person or entity shall not be required to withhold any tax under Section 13020 for wages, as defined by this section, unless that person or entity is required to withhold tax for those wages as defined by Section 13009.

(Added by Stats. 1999, Ch. 144, Sec. 2. Effective January 1, 2000.)

13010.
  

“Withholding agent” means any person required to deduct and withhold any tax under the provisions of Section 13020.

(Added by Stats. 1980, Ch. 1007, Sec. 64. Operative July 1, 1981, by Sec. 67 of Ch. 1007.)

13011.
  

The department shall retain the possession and control of all records, papers, offices, equipment, supplies, moneys, funds, appropriations, land, and other property real or personal held for the benefit or use of the Franchise Tax Board in the performance of the duties, powers, purposes, responsibilities, and jurisdiction of the Franchise Tax Board that were previously delegated by Section 15702.1 of the Government Code and that are vested in the department by Section 13000.

(Added by Stats. 1980, Ch. 1007, Sec. 64. Operative July 1, 1981, by Sec. 67 of Ch. 1007.)

13013.
  

All regulations heretofore adopted by the Franchise Tax Board pursuant to powers transferred to the department by this division and in effect immediately preceding the operative date of this division, shall remain in effect and shall be fully enforceable unless and until readopted, amended, or repealed by the director.

(Added by Stats. 1980, Ch. 1007, Sec. 64. Operative July 1, 1981, by Sec. 67 of Ch. 1007.)

13014.
  

This division does not apply to the payment of interest obligations not taxable under this division.

(Added by Stats. 1980, Ch. 1007, Sec. 64. Operative July 1, 1981, by Sec. 67 of Ch. 1007.)

13015.
  

The department is authorized to require such information with respect to persons subject to the taxes imposed by this division as is necessary or helpful in securing proper identification of such persons.

(Added by Stats. 1980, Ch. 1007, Sec. 64. Operative July 1, 1981, by Sec. 67 of Ch. 1007.)

13016.
  

When necessary to make effective the provisions of this division, the name and address of the recipient of income shall be furnished upon demand of the person paying the income.

(Added by Stats. 1980, Ch. 1007, Sec. 64. Operative July 1, 1981, by Sec. 67 of Ch. 1007.)

13017.
  

Unless otherwise specifically provided, the provisions of any law effecting changes in withholding under this division shall begin in the manner set forth by Section 18665 of the Revenue and Taxation Code.

(Amended by Stats. 1993, Ch. 877, Sec. 96. Effective October 6, 1993. Operative January 1, 1994, by Sec. 102 of Ch. 877.)

13018.
  

(a) Except as otherwise provided by this division or other express provision of law, the information furnished or secured pursuant to this division shall be used solely for the purpose of administering the tax laws or other laws administered by the person or agency obtaining it. Any willful unauthorized inspection or unwarranted disclosure or use of the information by the person or agency, or the employees and officers thereof, is a misdemeanor. For purposes of this section, “inspection” means any examination of confidential information furnished or secured pursuant to this division.

(b) The department shall notify a taxpayer of any known incidents of willful unauthorized inspection or unwarranted disclosure or use of the taxpayer’s confidential tax records, but only if criminal charges have been filed for the willful unauthorized inspection or unwarranted disclosure.

(Added by Stats. 1998, Ch. 623, Sec. 4. Effective January 1, 1999.)

13019.
  

(a) (1) With respect to tax advice, the protections of confidentiality that apply to a communication between a client and an attorney, as set forth in Article 3 (commencing with Section 950) of Chapter 4 of Division 8 of the Evidence Code, also shall apply to a communication between a taxpayer and any federally authorized tax practitioner to the extent the communication would be considered a privileged communication if it were between a client and an attorney.

(2) Paragraph (1) may only be asserted in any noncriminal tax matter before the Employment Development Department.

(3) For purposes of this section:

(A) “Federally authorized tax practitioner” means any individual who is authorized under federal law to practice before the Internal Revenue Service if the practice is subject to federal regulation under Section 330 of Title 31 of the United States Code, as provided by federal law as of January 1, 2000.

(B) “Tax advice” means advice given by an individual with respect to a state tax matter, which may include federal tax advice if it relates to the state tax matter. For purposes of this subparagraph, “federal tax advice” means advice given by an individual within the scope of his or her authority to practice before the federal Internal Revenue Service on noncriminal tax matters.

(C) “Tax shelter” means a partnership or other entity, any investment plan or arrangement, or any other plan or arrangement if a significant purpose of that partnership, entity, plan, or arrangement is the avoidance or evasion of federal income tax.

(b) The privilege under subdivision (a) shall not apply to any written communication between a federally authorized tax practitioner and a director, shareholder, officer, or employee, agent, or representative of a corporation in connection with the promotion of the direct or indirect participation of the corporation in any tax shelter, or in any proceeding to revoke or otherwise discipline any license or right to practice by any governmental agency.

(c) This section shall be operative for communications made on or after the effective date of the act adding this section.

(Added by Stats. 2009, Ch. 411, Sec. 3. (AB 129) Effective October 11, 2009.)

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