Updated April 5, 2011
The California Senate voted unanimously on March 24, 2011 to approve California Assembly Bill 36, which would bring California income and employment tax laws into conformity with federal tax law regarding group health coverage provided to dependents up to age 26. This vote was the last step in the legislative process before the bill goes to Governor Brown for signature.
Because AB 36 offers retroactive relief from having to track imputed state income for employees with overage dependents, employers will need to look to the Employment Development Department for guidance on amending information reported for 2010 on Forms DE 6 and DE 7, the quarterly wage and withholding report, and annual reconciliation report, respectively. Adjustments to either form filed in 2010 are made on form DE 678.
For 2011, however, DE 6 and DE 7 are replaced with form DE 9 (Quarterly Contribution Return and Report of Wages) and DE 9C (Quarterly Contribution Return and Report of Wages (Continuation)). Those new forms are amended by filing new EDD form DE 9ADI (Quarterly Contribution and Wage Adjustment Form). Per a contact at the EDD, after final passage of AB 36 they will study the measure and advise on corrective reporting steps; so the above instructions may change. To correct employee wage statements, employees will need to file Form 540X with the Franchise Tax Board.