ELECTRONIC FILING GUIDE FOR THE INDEPENDENT CONTRACTOR REPORTING PROGRAM DE 542M Rev. 9 (10-19) (INTERNET) Cover + 9 pages CU
| ELECTRONIC FILING GUIDE FOR THE INDEPENDENT CONTRACTOR REPORTING PROGRAM DE 542M Rev. 9 (10-19) (INTERNET) Cover + 9 pages CU |
|
If you have questions concerning
the Independent Contactor Reporting (ICR) program, visit
the Employment Development Department (EDD) ICR web page
or call 1-916-657-0529.
**********************************************************************
For assistance regarding the ICR electronic filing,
visit the ICR Frequently Asked Questions web page.
**********************************************************************
Please direct all general tax filing questions to the
EDD Taxpayer Assistance Center at 1-888-745-3886.
The EDD is an equal opportunity employer/program. Auxiliary aids and services are available
upon request to individuals with disabilities. Requests for services, aids, and/or alternate
formats need to be made by calling 1-888-745-3886 (voice), or TTY 1-800-547-9565.
DE 542M Rev. 9 (10-19) (INTERNET) Inside Cover + 9 pages
|
|
TABLE OF CONTENTS
I. INTRODUCTION
Background – Independent Contractor Reporting Program .............................................. 1
II. GENERAL INFORMATION
Independent Contractor .................................................................................................... 2
Required Information for Independent Contractor Reporting ............................................ 2
Filing Deadline ................................................................................................................. 2
Ongoing Contract ............................................................................................................. 3
Penalties .......................................................................................................................... 3
Electronic Reporting Advantages ..................................................................................... 3
III. ELECTRONIC REPORTING
e-Services for Business Enrollment .................................................................................. 4
Electronic Filing Options for Independent Contractor Reporting ....................................... 4
File Rpt. of Ind. Contractors ..................................................................................... 4
Upload a Bulk Return File ........................................................................................ 4
Federal/State Employment Taxes (FSET) – Bulk Transmissions ............................. 5
APPENDIX A
Independent Contractor File Format ................................................................................. 6
File Specifications ............................................................................................................ 6
Record Types ................................................................................................................... 6
Code RIC – Service-Recipient Record Layout .................................................................. 7
Code PIC – Service-Provider Record Layout .................................................................... 8
Code TIC – Total Record Layout ...................................................................................... 9
DE 542M Rev. 9 (10-19) (INTERNET) i + 9 pages
|
| I. INTRODUCTION Background – Independent Contractor Reporting Program Since 1998, all employers have been required to report new hires in California to the EDD as part of the New Employee Registry program. In 1999, Senate Bill 542 was passed by the California Legislature to expand the new employee reporting requirements to include independent contractors. Effective January 1, 2001, any business deriving trade or business income from sources within California or subject to the laws of California or required to file a federal Miscellaneous Income (Form 1099-MISC) for services performed by an independent contractor, must report specific information to the EDD. This information assists state agencies in establishing, modifying, or enforcing child support obligations. DE 542M Rev. 9 (10-19) (INTERNET) Page 1 of 9 |
|
II. GENERAL INFORMATION
Independent Contractor
For California purposes, an independent contractor is defined as an individual who is not an
employee of a business or government entity but receives compensation or executes a contract
for services performed for that business or government entity either in or outside of California.
For clarification, refer to Information Sheet: Employment Work Status Determination
(DE 231ES) (PDF).
Required Information for Independent Contractor Reporting
Any business or government entity that is required to file Form 1099-MISC for services
performed by an independent contractor must report to the EDD.
The following information is required when reporting independent contractors to the EDD:
Business or Government Entity Information (Service-Recipient)
• Business name, address, and phone number
• Federal Employer Identification Number (FEIN)
• California EDD employer payroll tax account number (if applicable)
• Social Security number
Independent Contractor Information (Service-Provider)
• First name, middle initial, and last name
• Social Security number
• Address
• Start date of contract (if no contract, date payments equal or exceed $600)
• Amount of contract (including cents)
• Contract expiration date (if applicable)
• Ongoing contract (check box if applicable)
Filing Deadline
The independent contractor information must be reported to the EDD within 20 calendar days of
either making payments more than or equal to $600, orentering into a contract more than or
equal to $600 with an independent contractor in any calendar year, whichever is earlier.
Businesses that transmit electronically are required to submit two monthly reports no less than
12 days and no more than 16 days apart. Reports should not be submitted if there are no
independent contractors to report.
DE 542M Rev. 9 (10-19) (INTERNET) Page 2 of 9
|
| II. GENERAL INFORMATION Ongoing Contract An ongoing contract is required to be reported only once in a calendar year for each service-provider (independent contractor) within 20 calendar days of making payments totaling $600 or more orentering into a contract of $600 or more. Penalties The EDD may assess a penalty of $24 for each failure to report the independent contractor, as required and within the time required, unless the failure is due to good cause. The EDD may assess a penalty of $490 if the failure to report an independent contractor is the result of a conspiracy between the service-recipient and the service-provider to not supply the required report or to supply a false or incomplete report. Electronic Reporting Advantages The EDD offers many electronic filing options and encourages businesses to report electronically. The advantages of electronic reporting include: • Fast, easy, and secure way to submit your report. • Simple one-time online enrollment to use the e-Services for Business applications. • Confirmation that the report has been received by the EDD. • No mailing costs. DE 542M Rev. 9 (10-19) (INTERNET) Page 3 of 9 |
|
III. ELECTRONIC REPORTING
e-Services for Business Enrollment
To file reports electronically, you must establish a username and password. Tax preparers
(payroll agents, payroll services, Certified Public Accountants, or other employer
representatives) can establish their own username and password to report on behalf of their
clients.
To enroll, go to e-Services for Business. Select Enroll and follow the prompts. Tutorials and
Frequently Asked Questions are located on the e-Services for Business web page.
Electronic Filing Options for Independent Contractor Reporting
The EDD offers a secure website to submit the Report of Independent Contractor(s) (DE 542)
information. The following electronic filing options are available:
File Rpt. of Ind. Contractors
The File Rpt. of Ind. Contractors option allows businesses to complete and submit their
independent contractor information. This program is designed for businesses to enter the
information for up to 30 independent contractors in one submission. The pop-up blocker
must be disabled in order to use the File Rpt. of Ind. Contractors option.
To file the Report of Independent Contractor(s), log into e-Services for Business.
1. If you have a State Employer Account Number, select the account link
(e.g. “Employment Tax”) and then select Show All .
If you do not have a State Employer Account Number, select Show All .
2. Select the File Rpt. of Ind. Contractors.
3. Follow the prompts to complete and submit the DE 542.
Once your report is successfully submitted, you will receive a confirmation number.
Upload a Bulk Return File
The Upload a Bulk Return File option allows businesses to submit their independent
contractor information as a file attachment over the Internet. Please see Appendix A for the
file format, file specifications, general record usage information, and record layouts.
To Upload a Bulk Return File, log into e-Services for Business.
1. Under “I Want To,” select Upload a Bulk Return File.
2. Follow the prompts to submit the DE 542 file attachment.
Once your report is successfully submitted, you will receive a confirmation number.
DE 542M Rev. 9 (10-19) (INTERNET) Page 4 of 9
|
| III. ELECTRONIC REPORTING (Continued) Federal/State Employment Taxes (FSET) – Bulk Transmissions The FSET program provides a standardized method for reporting the independent contractor in eXtensible Markup Language (XML) through a Web-Service based application-to-application transmission platform. The FSET program is open to: • Any business or government entity, who wants to either develop their own software or use the services of a participating payroll service provider or transmitter. • Software developers, transmitters, and payroll service providers who act as reporting agents. You can download the Federal/State Employment Taxes Information Guide (DE 545) (PDF, 1.04MB), the FSET DE 542 schema, and the enrollment form from the FSET web page. If you would like to use the services of a payroll service provider or transmitter to file your reports, a link to the list of the EDD-approved FSET providers is located on the web page. DE 542M Rev. 9 (10-19) (INTERNET) Page 5 of 9 |
|
APPENDIX A
Independent Contractor File Format
• Data must be recorded in standard ASCII code created on MS/PC-DOS operating system.
• Data must be written in UPPER CASE LETTERS ONLY.
File Specifications
• The file name should be reported as INDCONTR.
• Each record in the file must be created with a fixed length of 175 characters.
• If record delimiters are used (CR – Carriage Return followed by LF – Line Feed), they must
follow the last character of each record and be placed in positions 176 and 177,
respectively.
• You may report multiple businesses and/or government entities on the same file. However,
each business and/or government entity must have a valid FEIN before it can be reported
electronically.
• The full first and last name of each independent contractor (Service Provider) must be
reported.
• Each segment (first, middle, last) of the name must be entered in the appropriate field.
• Complete address of each independent contractor must be reported.
• Omit leading titles (e.g., Mr., Mrs.) from the first name field.
• Omit trailing titles (e.g., M.D., D.D.S.) from the last name field.
• Do not separate leading letters from the rest of the surname by an apostrophe or a blank.
(Example: O’Neill would be ONEILL or MC Nab would be MCNAB)
• Special characters and/or punctuation are not acceptable.
• Business names are not acceptable in the Code PIC – Service-Provider Record.
Record Types
The following three record types are required to create an independent contractor report:
• Code RIC – Service-Recipient Record identifies a business or government entity whose
independent contractor information is being reported.
• Code PIC – Service-Provider Record is used to report the independent contractor data. A
separate Code PIC record must be generated for each independent contractor to be
reported.
• Code TIC – Total Record contains the total number of Code PIC records reported since the
last Code RIC record. A Code TIC record must be generated for each Code RIC record.
DE 542M Rev. 9 (10-19) (INTERNET) Page 6 of 9
|
|
APPENDIX A (Continued)
Code RIC – Service-Recipient Record Layout
CODE RIC – SERVICE-RECIPIENT RECORD
LOCATION FIELD LENGTH DESCRIPTION AND REMARKS
Note: Blank fill means to use the spacebar to fill a field.
1-3 Record Identifier 3 Enter “RIC.” Each business or government entity to be
reported must begin with a Code "RIC" record.
4-12 Federal Employer 9 Enter the service-recipient’s (business or government
Identification entity’s) assigned FEIN. Omit hyphens. Required element.
Number (FEIN)
13-20 EDD Employer 8 Enter the number assigned by the California EDD, if
Account Number applicable. A seven-digit account number followed by a
check digit. Left justify. Omit hyphens. If this field is not
applicable, blank fill or zero fill.
21-29 Service-Recipient’s 9 Enter the service-recipient’s Social Security number, if
SSN applicable. Left justify and zero fill. Omit hyphens.
30-74 Service-Recipient’s 45 Enter the service-recipient’s name. Left justify and blank fill.
Name
75-114 Street Address 40 Enter the service-recipient’s street address. Left justify and
blank fill.
115-139 City 25 Enter the service-recipient’s city. Left justify and blank fill.
140-141 State 2 Enter the valid United States Postal Service (USPS) state
abbreviation.
142-146 ZIP Code/Foreign 5 Enter a valid ZIP Code. For a foreign address, use this field
Postal Code for the Foreign Postal Code. Left justify and blank fill.
147-150 ZIP Code Extension 4 Enter the four-digit extension of the ZIP Code. Left justify
and blank fill. If this field is not applicable, blank fill.
151-153 Area Code 3 Enter the three-digit area code of the service-recipient.
154-160 Phone Number 7 Enter the seven-digit phone number of the service
recipient. Do not enter blanks or hyphens.
161-175 Blank 15 Blank fill.
DE 542M Rev. 9 (10-19) (INTERNET) Page 7 of 9
|
|
APPENDIX A (Continued)
Code PIC – Service-Provider Record Layout
CODE PIC – SERVICE-PROVIDER RECORD
LOCATION FIELD LENGTH DESCRIPTION AND REMARKS
Note: Blank fill means to use the spacebar to fill a field.
1-3 Record Identifier 3 Enter “PIC.”
4-12 Service-Provider’s 9 Enter the service-provider’s Social Security number. Omit
(Independent hyphens.
Contractor’s) SSN
13-28 Service-Provider’s 16 Enter the service-provider’s first name. Left justify and
First Name blank fill.
29 Service-Provider’s 1 Enter the service-provider’s middle initial. If no middle
Middle Initial initial, blank fill.
30-59 Service-Provider’s 30 Enter the service-provider’s last name. Left justify and
Last Name blank fill.
60-99 Service-Provider’s 40 Enter service-provider’s address. Left justify and blank fill.
Address
100-124 City 25 Enter service-provider’s city. Left justify and blank fill.
125-126 State 2 Enter the valid USPS state abbreviation.
127-131 ZIP Code/Foreign 5 Enter a valid ZIP Code. For a foreign address, use this field
Postal Code for the Foreign Postal Code. Left justify and blank fill.
132-135 ZIP Code Extension 4 Enter the four-digit extension of the ZIP Code. Left justify
and blank fill. If this field is not applicable, blank fill.
136-143 Start Date of 8 Enter the start date of the contract in a YYYYMMDD
Contract format. If no contract, enter the date when total payments
made equal or exceed $600 in a YYYYMMDD format.
144-154 Amount of Contract 11 Enter the amount of the contract, including dollars and
cents. Do not enter dollar signs, commas, or decimal
points. Right justify and zero fill.
155-162 Contract Expiration 8 Enter the expiration date of the contract in a YYYYMMDD
Date format. Required element unless contract is ongoing. If
ongoing, blank fill.
163 Ongoing Contract 1 Enter “Y” if applicable, otherwise blank fill.
164-175 Blank 12 Blank fill.
DE 542M Rev. 9 (10-19) (INTERNET) Page 8 of 9
|
|
APPENDIX A (Continued)
Code TIC – Total Record Layout
CODE TIC – TOTAL RECORD
LOCATION FIELD LENGTH DESCRIPTION AND REMARKS
Note: Blank fill means to use the spacebar to fill a field.
1-3 Record Identifier 3 Enter “TIC.”
4-14 Number of Service- 11 Enter the total number of Code "PIC" records reported
Providers Reported since the last Code "RIC" record. Right justify and zero fill.
15-175 Blank 161 Blank fill.
DE 542M Rev. 9 (10-19) (INTERNET) Page 9 of 9
|