California Unfiled Payroll Tax Returns Checklist
What Unfiled Payroll Tax Returns Mean
Unfiled payroll tax returns represent quarterly or annual forms that California businesses must submit to report employee wages, tax withholdings, and employer contributions to the
Employment Development Department. When EDD records show that a business has not filed these returns for one or more quarters or years, the business falls out of compliance with state payroll tax filing requirements.
California requires businesses to file Form DE 9 (Quarterly Contribution Return and Report of
Wages) and Form DE 9C (Quarterly Contribution Return and Report of Wages Continuation)
each quarter. These quarterly returns fund unemployment insurance benefits, state disability insurance programs, and paid family leave.
Why the State Issues Notices
The Employment Development Department issues unfiled return notices to verify that businesses properly withhold employee taxes and pay employer contributions on time. Filing requirements exist because these contributions fund unemployment insurance, employment training tax, state disability insurance, and personal income tax withholding programs under the
California Unemployment Insurance Code.
State records automatically trigger notice procedures when returns are missing. Investigations do not occur before notices are issued, making the absence of a filed return sufficient cause for automated enforcement action through the state agency systems.
Consequences of Ignoring Notices
Ignoring unfiled payroll tax returns leads to escalating enforcement action through progressively serious notices demanding filing and payment. After initial notices, the Employment
Development Department may assess estimated taxes and penalties based on prior filing patterns or other available information.
Penalties and interest continue to accrue during non-compliance periods. California
Unemployment Insurance Code Section 1112.5 imposes a 15 percent late filing penalty, while
Section 1114 adds a $20 penalty per employee for missing wage reports. Extended delays in filing returns increase both complexity and total costs of resolution significantly.
What Unfiled Return Notices Do Not Mean
Receiving a notice about unfiled returns does not automatically mean the state has initiated criminal prosecution or seized business assets. Operating licenses remain valid at the notice stage, though suspension becomes a possible consequence if the issue remains unresolved.
An unfiled return notice is a demand for compliance, not a final assessment or judgment. The state has not yet determined the exact amount owed or filed a lien at this stage of the collection process.
Steps to Resolve Unfiled Returns
1. Locate and review all notices
Gather every notice you received from the Employment Development Department related to payroll taxes. Note the dates, account numbers, periods referenced, and any specific instructions or deadlines listed in the correspondence.
2. Determine which returns are unfiled
Review your business records to identify which quarters or years have missing returns.
Compare the periods listed in state notices with your internal filing records, bank statements, and payroll documentation maintained through your accounting systems.
3. Gather payroll documentation
Collect all payroll records for the unfiled periods, including employee wage information, withholdings, and employer contribution amounts. Payroll registers, tax deposit records, and employee W-2 forms provide the necessary data to complete any missing returns accurately.
4. Access the EDD website
Visit the Employment Development Department website at edd.ca.gov to review current filing requirements and form instructions. Download the specific forms required for your business type and the periods in question from the official state portal.
5. Contact the EDD for account information
Call the Taxpayer Assistance Center at 1-888-745-3886 to confirm the exact periods for which returns are unfiled and the current status of your account. Your California Employer Account
Number and business name must be readily available when making this contact.
6. Complete the unfiled returns
Prepare the required Form DE 9 and Form DE 9C for each missing quarter or year using the information gathered from your payroll records. All required fields must be completed, and the returns must be signed according to state requirements before submission.
7. Submit returns through proper channels
File the completed returns according to the state’s current submission procedures through e-Services for Business. All employers must electronically submit employment tax returns and wage reports to comply with the e-file and e-pay mandate established by California law.
8. Address outstanding tax payment
Determine the total tax amount owed for the unfiled periods, including the base tax, any penalties and collection costs, and accrued interest. Contact the state to confirm the exact amount due and available payment options before proceeding with resolution.
9. Request payment arrangement if needed
Installment agreement options may be available for businesses unable to pay the full balance immediately. Contact the Employment Development Department to inquire about payment plans and submit payment according to the agreed-upon terms once approval is granted.
Penalty Relief Options
The Employment Development Department offers penalty waivers based on good cause or reasonable cause only. Written requests require an evaluation of the facts presented by the employer, and the state must determine that qualifying circumstances exist based on the specific case details.
Common Mistakes to Avoid
Missing deadlines in state notices result in additional penalties and escalated collection action.
Filing incomplete or inaccurate returns delays resolution and triggers additional state inquiries that extend the compliance process unnecessarily.
Ignoring follow-up notices from the Employment Development Department escalates enforcement even if earlier notices were addressed. Payment or a payment arrangement is required to stop collection action, as filing returns without paying associated taxes and penalties does not resolve the compliance issue.
Final Considerations
Unfiled payroll tax returns require prompt attention through a clear, step-by-step process that addresses both filing obligations and payment requirements. Taking action demonstrates a good faith effort and prevents the situation from worsening through more aggressive collection measures such as liens or levies.
Facing State Enforcement or Payroll Tax Issues?
If you’ve received a state tax notice and aren’t sure how to respond, we can help you review your options and next steps.
We help with
- State enforcement actions and notices
- Payroll tax debt review and resolution
- Penalty and interest reduction options
- Payment plans and compliance solutions
- Representation before state tax agencies
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