What Form 3539 (2018) Is For
Form 3539 (2018) is a payment voucher issued by the California Franchise Tax Board that allows corporations and exempt organizations to make a timely payment when requesting an automatic extension to file their annual tax return. Although California law grants an automatic six-month extension to file, it does not extend the deadline to pay. This form is only required if the entity owes tax and plans to submit payment by check or money order instead of using an approved electronic method.
When You’d Use Form 3539 (2018)
You should use Form 3539 (2018) only if specific filing and payment conditions apply.
You cannot file your tax return by the original due date
If your Form 100, 100S, 100W, 109, or 199 will not be submitted on time, you qualify for an automatic extension to file.
You owe tax for the 2018 taxable year
If your prior estimated payments and credits do not fully cover the amount due, this form is required to pay the remaining balance.
Your business is subject to California’s minimum franchise tax
Even if your entity had no income or operated at a loss, most corporations must pay the minimum $800 tax by the original due date.
You are paying by check or money order
If you choose not to pay electronically and are under the electronic threshold, you must complete and mail Form 3539 with your payment.
Key Rules or Details for 2018
Several vital guidelines under the California Revenue and Taxation Code apply to entities using Form 3539 (2018).
Automatic extension only applies to filing, not payment
California’s automatic six-month extension allows more time to file your return, but does not extend the deadline to pay taxes owed.
Electronic payment thresholds are enforced
If you make a payment exceeding $20,000 or your total liability exceeds $80,000, all future payments must be submitted electronically to avoid a 10% penalty.
The minimum franchise tax must be paid regardless of income
Entities subject to the California Corporation Franchise Tax must pay the $800 minimum by the original due date, even if there is no taxable income.
Reasonable cause safe harbor protects those who pay 90% or more
If at least 90% of your total tax liability is paid on time, the Franchise Tax Board will typically waive late payment penalties, though interest still applies.
Combined reporting groups have specific filing rules
Only the key corporation in a combined reporting group is required to submit Form 3539 and pay the minimum franchise tax for each included member.
Step-by-Step (High Level)
Follow these general steps to determine whether you need Form 3539 (2018) and how to complete it correctly.
Determine if you qualify for the extension and need to pay
If you cannot file your return by the original due date and owe tax, you must submit payment using this form, unless you are paying electronically.
Complete the Tax Payment Worksheet included with the instructions
Use the worksheet provided by the Franchise Tax Board to calculate the tentative tax, subtract prior payments, and determine any balance due.
Select your payment method based on amount and method eligibility
Use EFT, Web Pay, or credit card if required or preferred; only use Form 3539 if paying by check or money order.
Fill out Form 3539 with accurate identifying and payment information
Include your federal employer identification number (FEIN), California corporation number, address, and the payment amount as determined from the worksheet.
Prepare and send your payment along with Form 3539
Make the check payable to the Franchise Tax Board, write identifying numbers and “2018 FTB 3539” on it, and mail it by the original due date to the correct address.
File your complete tax return by the extended deadline
After payment is submitted, you have until October 15, 2019, for calendar-year C corporations (or other applicable extended dates) to file your return.
Common Mistakes and How to Avoid Them
Many filers make avoidable errors when submitting Form 3539 (2018); here are the most common mistakes and how to prevent them.
Filing Form 3539 when no tax is owed
Do not file the form if your estimated payments and credits already cover your 2018 tax liability, as the automatic extension still applies without it.
Confusing extension to file with extension to pay
Always remember that the six-month automatic extension only extends the time to file, not the time to pay; your full tax must be paid by the original deadline.
Underpaying the minimum franchise tax
Corporations subject to California’s minimum franchise tax must pay at least $800 by the original due date, regardless of income or loss.
Paying electronically and still mailing Form 3539
If you use EFT, Web Pay, or a credit card, do not mail Form 3539, as electronic payments are automatically recorded and duplicate filings may cause confusion.
Missing the 90% reasonable cause safe harbor threshold
If you cannot pay the full tax amount by the due date, make sure to pay at least 90% of your total tax liability and any required minimums to avoid late penalties.
Ignoring the electronic payment mandate after meeting the threshold
If you make a payment over $20,000 or owe more than $80,000 in total tax, all future payments must be made electronically to avoid the 10% penalty.
What Happens After You File
Once Form 3539 (2018) and your payment are submitted, the Franchise Tax Board generally processes them within two to four weeks. You will not receive an acknowledgment, but you can confirm the payment through your online account or by contacting the FTB. When your full return is filed, the payment will be reconciled with the total tax liability. If you have overpaid, the excess amount will be refunded or applied to future taxes.
FAQs
Do I need to file Form 3539 (2018) if I already made estimated payments throughout the year?
You only need to file Form 3539 (2018) if your estimated payments and credits do not fully cover your tax liability by the original deadline.
Is this form required for amended returns or corrections?
No, Form 3539 (2018) is not used to amend previously filed returns; you must file the applicable return form directly, such as Form 100S or Form 109.
Can I request an additional extension beyond the automatic payment deadline?
You may be eligible to file Form FTB 3593 for a limited payment deferral if you expect a net operating loss carryback, but this does not extend the time to file under California law.
Does California follow the same rules as the Internal Revenue Code for extensions?
While California tax law aligns with some federal law provisions under the Internal Revenue Code, the Franchise Tax Board enforces its own rules regarding deadlines and payments for taxable years.
What happens if I submit Form 3539 but my entity is suspended or forfeited?
If your corporation is suspended under the California Revenue and Taxation Code, the automatic extension is invalid, and your return is immediately considered delinquent by the Franchise Tax Board.
