For Employers
Did you know a California law (Assembly Bill No. 1847), effective January 1, 2017, required employers to provide written notice to employees of their potential eligibility for both the federal and California Earned Income Tax Credits (EITC)? An employer needs to notify all employees they may be eligible for the federal and the California EITC (CalEITC) within one week before or after, or at the same time, that the employer provides an annual wage summary (e.g., a Form W-2 or Form 1099) to any employee. Notification can by provided by handing information directly to the employee or mailing to the employee’s last known address, either of the following: Instructions on how to obtain any notices available from the Internal Revenue Service and the Franchise Tax Board for this purpose on the California EITC (at the website www.ftb.ca.gov); or, any notice created by the employer, as long as it contains substantially the same language in the notice required under the law. An employer does NOT satisfy the notification requirement by posting a notice on an employee bulletin board or by sending it through office mail.

For language that must be included in the notice to employees regarding the availability of both the federal EITC and the California EITC, visit https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=201520160AB1847.

Tax Professional Requirements
Paid preparers must meet due diligence requirements when they determine a taxpayer’s eligibility for, and the amount of, the CalEITC. Generally, if a preparer prepares Cal EITC claims, a preparer must ask all the questions required on FTB 3596, Paid Preparer’s California Earned Income Tax Credit Checklist, as well as, ask additional questions when the information the client gives seems incorrect, inconsistent, or incomplete.

Preparers must complete and submit the FTB 3596 for all paper and electronic tax returns and all other CalEITC claims. The
form is required for all Cal EITC claims with a qualifying child and claims with no qualifying child. Also, preparers must keep a
copy of the completed FTB 3596 and the worksheet showing the CalEITC computation contained in the instructions of FTB 3514,
California Earned Income Tax Credit. If paid preparers fail to comply with due diligence requirements, the FTB may assess a
$500 penalty for each failure. For more information, visit the FTB’s webpage for Tax Professionals at www.ftb.ca.gov.