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EFT Payment Options

There are two reporting methods for making ACH EFT payments:

As their names indicate, both transactions are processed through the Automated Clearing House (ACH) system.

The differences between the two methods are explained in this section so you can select the payment method you prefer. After you decide on a payment method, you must complete an Authorization Agreement for Electronic Funds Transfer (Form CDI 93-01). This form is located at Chapter VI, Appendix D. See Chapter IV for more information on how to register for EFT.

Automated Clearing House (ACH) Debit

Definition ACH Debit method allows you to initiate the transfer that electronically debits an account you control for the amount(s), which you report to the State's data collection service. Your account will be debited only upon your initiation and for the amount you specify.

Costs

You will be responsible for any fees, if any, that your financial institution may charge you for the actual transfer of funds.

Prenote Test

When you complete the Authorization Agreement for EFT, you will provide the bank routing number and the specific bank account you want debited to pay your taxes. This information is entered into CDI's computer and transmitted to the State's data collection service. The data collector will then initiate a prenote (prenotification) test. The prenote is a zero dollar transaction to your account to verify the bank information you provided. This test must be processed at least 10 business days prior to your first EFT payment.
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Communication Methods

You can choose one of the following methods to contact the State's data collection service:

Telephone (voice operator assisted or touch tone)
Personal Computer Online Payments

How To Report A Payment

To make an ACH Debit payment, call the State's data collection service at the toll-free number (1-800-554-7500). When you call, you will be asked to provide the following information:

EFT Taxpayer Identification Number (TIN)
Security Code
Tax Type Code
Tax Due Date
Payment Amount
Date Your Bank Account Will Be Debited (Warehousing)

EFT Taxpayer Identification Number

This is your 8-digit numeric EFT Taxpayer Identification Number (TIN). The California Department of Insurance will assign this number to you when you set up your EFT account. This EFT TIN will be validated by the State's data collection service and will direct your tax payment to the proper taxpayer account. Your EFT TIN is your identification number for your tax payments. Your California Department of Insurance permanent number and/or license number will remain the same.

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Security Code

Once EFT information is entered into CDI's computer and transmitted to the State's data collection service, you are then assigned a temporary generic security code. Before you report your first payment, you must call the State's data collection service voice operator (see Appendix A) and change the generic code to a four-digit numeric code of your choice. This will be your security code when reporting each payment thereafter. Changing your security code will ensure that outside parties do not have access to your security code. Your security code is not shared with the California Department of Insurance and you may change your code at any time. If you lose or forget your security code, contact CDI's Tax Accounting/EFT Desk at (916) 492-3288 or e-mail at eft@insurance.ca.gov for assistance.

CDI does not have access to your bank account without your authorization. The ACH Debit method can only be initiated by using your EFT Taxpayer Identification Number (TIN) along with your unique security code that you create. Funds can only be transferred to the State's bank account at your request.

Tax Type Code

This code is used to identify the type of tax payment being made. Only one tax type code can be used for each tax payment transaction. The California Department of Insurance uses the following codes:

07130 Premium Tax - Annual
07131 Premium Tax - Prepayment (Quarterly)
07133 Retaliatory Tax
07134 Ocean Marine
07150 Surplus Line Tax - Annual
07153 Surplus Line Tax - Installment (Monthly)

Tax Due Date

This is the due date of the tax you are reporting. This information must be given in MMDDYY format, whereby the YY can be current, prior or next year only. Please refer to the list of tax due dates under the section "General Information".

Payment Amount

The payment amount will be entered in dollars and cents. The maximum amount allowed for any one transaction is $99,999,999.99.

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Date Your Bank Account Will Be Debited (Warehousing)

You can specify what date you would like your bank account to be debited. This date is to be entered in the MMDDYY format. This entry has a maximum range of 60 days from the date you are calling in your payment. Please make sure that the date you specify for your bank account to be debited is not a weekend or observed holiday. After you have reported your payment, you will be provided a reference number that will validate your payment. Keep this reference number for your records.

If you will be making your payment from outside of the United States, call CDI's Tax Accounting/EFT Desk at (916) 492-3288, or e-mail at eft@insurance.ca.gov for assistance.

When To Report A Payment

For an electronic tax payment to be timely, the transferred funds must settle into the California Department of Insurance's bank account by the first banking day following the tax due date. To ensure that your funds settle timely into CDI's account, you must call the State's data collection service on or before the tax due date.

You can call the State's data collection service at any time to report your payment. The service is available 24 hours a day, year round. If you call on the tax due date, you must allow enough time to complete your call by 3:00 p.m. Pacific Time. Otherwise, your payment will not be initiated until the next business day and will be considered late.

Cancellations, Corrections, And Inquiries

You may cancel, correct, or inquire about a reported transaction if you call the State's data collection service voice operator before 3:00 p.m. Pacific Time the same day the transaction was reported. If you have reported the wrong information to the State's data collection service and missed the 3:00 p.m. Pacific Time deadline for correcting the entry, call CDI's Tax Accounting/EFT Desk at (916) 492-3288 or e-mail at eft@insurance.ca.gov for assistance.

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Automated Clearing House (ACH) Credit

Definition
The ACH Credit method allows you to transfer funds by instructing your financial institution to debit your account and credit the California Department of Insurance's bank account.

Costs

You must pay the fees charged by your financial institution for any set-up costs and for each ACH Credit transaction initiated.

Record Format Requirements

Your financial institution will debit your account and credit the California Department of Insurance's bank account through the Automated Clearing House network. In order to report your tax payment correctly, your financial institution must originate your payment using the Cash Concentration or Disbursement plus Tax Payment Addendum (CCD+/TXP ) format. This is the standard format that has been adopted for tax payments by the National Automated Clearing House Association (NACHA) and endorsed by the Federation of Tax Administrators.

Before selecting the ACH Credit method, you should check with your financial institution to confirm that they can originate an ACH Credit transaction in the required record format.

How To Report A Payment

Since your financial institution will originate your payment, you should contact them for specific procedures to follow.

At the time you contact your financial institution to report your payment, you must provide them with the filing information required to complete the ACH CCD+/TXP records (such as the tax amount and tax due date). The free form portion of the TXP Addenda Record is shown in the TXP Addenda Convention Layout provided in Appendix B.

If you choose the ACH Credit method, we will mail you the California Department of Insurance's bank account and transit/routing number. You must provide this information to your financial institution before you report your first EFT payment.

If you are making a payment to more than one California State Department, it is important to note that each tax department has its own bank account number and requests different information for the "free form area" of the Tax Payment (TXP) Addenda Record. Although the actual addenda formats for each department may look similar, the information requested is different.

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When To Report A Payment

To be timely, your tax payment must settle into the California Department of Insurance's bank account by the first banking day following the tax due date. You must check with your financial institution to determine when you should originate your payment so that it will settle in CDI's account on time.

You should also check with your financial institution to ensure that they are open for business the day you plan to originate your payment through the ACH network.

The State cannot guarantee timely settlement for an ACH Credit transaction.

Corrections

If you choose the ACH Credit method and discover you have reported erroneous information, you must contact your financial institution for assistance. You are responsible for any errors in reporting or transmitting an ACH Credit transaction.

Prenote Test

It is strongly recommended that your financial institution conduct a prenote (prenotification) test to validate the California Department of Insurance's bank account and routing/transit number. This test uses a zero-dollar amount and must be made at least 30 days prior to your initial EFT tax payment.

Fedwire

(Prior Written Approval from Department Only)

Definition
A Fedwire payment is a wire transfer system used generally to transfer large dollar amounts instantaneously provided by the U.S. Federal Reserve System.

Prior Written Approval

The California Department of Insurance requires written request from taxpayers to use the Fedwire method for payment of insurance taxes. California Department of Insurance will notify you in writing if your request to use the Fedwire method has been approved. The use of Fedwire for payment of insurance taxes is for emergency use only.

If you do not receive prior written approval from the California Department of Insurance and use the Fedwire method to make your insurance tax payment, you will be assessed a ten percent penalty on the amount paid per California Revenue and Taxation Code, Section 12602 (c)(1) and California Insurance Code, Sections 1775.8 (c)(1) and 12976.5 (c)(1).