Form FTB 3539: CA S Corp Extension Tax Payment

California’s Form FTB 3539 is a payment voucher used by S corporations to remit tax that is owed when filing an annual return after the original deadline. By submitting the payment by the March 15th due date for calendar-year filers, the S corporation avoids potential penalties for late payment. This process also grants the business an automatic extension to file its tax return, Form 100S, at a later date.

Determining if You Need to File Form FTB 3539

An S corporation in California receives an automatic extension to file its state income tax return, Form 100S. This pushes the filing deadline six months forward to September 15th for entities that follow the calendar year. This extension applies only to filing the return and does not grant additional time to pay any taxes owed.

The requirement to use Form FTB 3539 depends on whether the S corporation anticipates a tax liability. If the business expects to owe state taxes and will not file Form 100S on time, it must use this voucher to send payment to the Franchise Tax Board (FTB). If no tax is due or a refund is expected, filing Form FTB 3539 is not necessary.

Information and Calculations for Form FTB 3539

Before completing the payment voucher, a corporation must gather its exact legal name, mailing address, California corporation number, and Federal Employer Identification Number (FEIN). This information must match the records on file with the FTB to ensure the payment is correctly applied. The current version of Form FTB 3539 is available on the Franchise Tax Board’s website.

The central task is calculating the payment amount, which begins with estimating the total tax liability for the taxable year. For a California S corporation, this liability is the greater of two figures: the tax on its net income, calculated at a rate of 1.5%, or the state’s $800 minimum franchise tax. The $800 minimum franchise tax is waived for S corporations in their first taxable year, though any net income is still subject to the 1.5% tax.

After determining this estimated total tax, the next step is to subtract any estimated tax payments already made or any other allowable tax credits. The result is the remaining tax due that must be paid with Form FTB 3539. For instance, if a corporation estimates its total tax to be $5,000 and has made payments totaling $3,000, the amount submitted would be $2,000. If the estimated tax is less than the $800 minimum, the corporation must still pay the $800, unless it is in its first year.

Submitting the Form and Payment

The Franchise Tax Board (FTB) offers several electronic payment methods, which are secure and ensure timely receipt. Corporations can pay online using Web Pay, which withdraws funds from a bank account, by credit card, or through an Electronic Funds Withdrawal (EFW). Electronic payment is mandatory for corporations if their extension payment is $20,000 or more, or if their total tax liability for the year is $80,000 or more. Failure to comply can result in a 10% penalty on the amount paid.

For those not required to pay electronically, payment can be made by check or money order. If paying by mail, the completed Form FTB 3539 voucher must be sent with the payment to the address listed on the form. The check or money order should be made payable to the “Franchise Tax Board,” with the corporation’s California corporation number and the tax year written on the memo line.

After the payment is processed, the S corporation has secured its automatic extension. The business must then file its complete California S Corporation Franchise or Income Tax Return (Form 100S) on or before the extended September 15th deadline, as failure to file by this later date can result in separate penalties.