Welcome to the Employment Development Department

FAQ - Internet File Transfer, Federal/State Employment Taxes (FSET)

What is the FSET (Federal/State Employment Taxes) program?

The FSET program was developed by the Internal Revenue Service (IRS), several states, and software vendors to establish a standardized format to electronically submit both federal and state employment tax information through the Internet. The program uses Extensible Markup Language (XML) and schemas (record layouts) that were developed for this purpose. The returns are transmitted to EDD using Web services.

The complete background on FSET is contained in the Federal/State Employment Taxes (FSET) Implementation Guide (DE 545). The guide provides information, direction, and examples required for enrollment, testing, and implementation.

The Employment Development Department's (EDD) FSET program currently accepts the electronic filing of the Quarterly Wage and Withholding Report (DE 6) and Annual Reconciliation Statement (DE 7). FSET will be expanded in the future to include the Report of New Employee(s) (DE 34) and Report of Independent Contractor(s) (DE 542).

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Who can use this program?

The FSET program is open to software developers, transmitters, and payroll service providers that act as reporting agents. It is also open to employers who want to develop their own software.

Individual business taxpayers who want to participate may choose to use the services of a participating payroll service provider or transmitter listed in e-Services.

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What are the benefits of the FSET program?

FSET has the following benefits:

  • Faster processing and response time
  • Secure Internet transmission
  • No mailing costs
  • Accurate reporting of information
  • Opportunity to correct errors
  • No CD-ROMs, diskettes, or tape cartridges to supply and handle
  • Available 24 hours a day

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When is FSET available?

The FSET program is available seven days a week, 24 hours a day except for maintenance periods. The FSET Gateway will be down for scheduled maintenance every Sunday from 7-10:00 p.m.

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Are tax file transmissions using FSET secure?

Yes. EDD established a network of distributed security to ensure the protection of information throughout our e-Services programs.

The EDD FSET Gateway uses Simple Object Access Protocol transmissions over a Secure Socket Layer connection using HTTPS protocol, which encrypts the data during transit. During the FSET registration process, a self-selected User ID and password are established. These credentials are passed and authenticated by EDD with each transmission.

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Is there a cost to participate in the FSET Program?

If your organization develops their own software, there is no cost to transmit your files to EDD.

If you do not want to develop your own application, and you decide to use the services of a payroll service or transmitter, you will need to purchase software or services. Please refer to the list of approved FSET providers.

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What are the minimum system requirements?

You can develop your client application in either JAVA or .NET. However, if you are coding in the JAX based WS2.x version of JAVA, you must utilize Base64 for transmitting attachments. This does not apply to newer versions of JAVA.

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What are the file limits of FSET?

The FSET program was engineered to process large volumes of tax data from multiple files and can accommodate most transmitters. To maximize your processing efficiency, do not exceed 10,000 employer returns per transmission.

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Who do I contact if I have questions?

If you are already participating in the FSET program and you have chosen the services of a software provider, payroll service, or transmitter, please contact them directly.

If you are developing your own FSET application, please e-mail your questions to fset@edd.ca.gov, or contact EDD's Electronic Systems Customer Service, Monday through Friday, 8 a.m. to 5 p.m., Pacific Time at (800) 796-3524 or fax your inquiry to (916) 654-7340.

If you have questions about a previously submitted and posted DE 6 or DE 7, please contact EDD's Taxpayer Assistance Center at (888) 745-3886.

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How do I enroll in the FSET program?

All transmitters must register and successfully test with EDD to participate in the FSET program. This includes payroll service providers, large employers, software developers, and any participant who is transmitting directly to EDD (for themselves or for others). To register, transmitters must first go to EDD's Web site (www.edd.ca.gov) to establish a User ID and password using the following steps:

  1. Go to EDD's Web site.
  2. Click on the Payroll Taxes tab.
  3. Click on the e-Services link on the right sidebar. This will take you to the Welcome to EDD's e-Services for Business Web page.
  4. Click on the Internet File Transfer (FSET) link which will take you to the Federal/State Employment Taxes (FSET) Web page.
  5. Click on the register link which can be found in the next to last paragraph on the page. This will take you to the Login to EDD Online Services Web page.
  6. Click on the link to register for online services which will take you to the EDD Online Services Registration Selection Web page.
  7. Click on the link to register in the Non-Employer Services section which will take you to the EDD Online Services Registration for Non-Employer Web page.
  8. Complete all mandatory fields, and then click the Register button to complete your registration.

Next, complete and sign a Federal/State Employment Taxes (FSET) Enrollment (DE 547) form and FAX it to (916) 654-7340, or mail it to:

ELECTRONIC COMMERCE SECTION, MIC 15A
EMPLOYMENT DEVELOPMENT DEPARTMENT
PO BOX 826880
SACRAMENTO CA 94280-0001

Once EDD has confirmed your enrollment in the FSET program, you will be sent a copy of the enrollment form you submitted with the "Department Use Only" section completed, indicating that you have been authorized to send files to the environment indicated. You will also receive a certification test package to aid in your testing, along with the test URL.

Participants must submit a revised DE 547 form to update their enrollment information when there are changes involving:

  • The participant's name, firm name, or DBA name.
  • Any address, telephone or contact representative.
  • FEIN, SSN, or EDD Employer Account Number.
  • The User ID.

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What is the certification test package?

The certification test package provides a two-step testing process that ensures your data and acknowledgements are sent and received properly using specified environments and Web methods. Testing also verifies the ability of your program to create and format valid returns.

The FSET Implementation Guide provides examples of transmission streams showing all the required transmission headers. EDD supports both Simple Object Access Protocol 1.1 and 1.2 specifications.

EDD staff will work with customers during the testing process to help resolve data and transmission issues.

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Do you have any tools to help with testing or transmitting?

EDD has a Test Client that you can use to aid you with your testing. The Test Client is used for testing and can also be an interim solution for you to send data and retrieve acknowledgements from EDD.

If you install the Test Client, you can run a Simple Object Access Protocol (SOAP) trace while making calls to the EDD Gateway and comparing the results to what your client is creating. The Test Client can also be used as a short-term solution for you to transmit files and retrieve acknowledgements from EDD. It is not meant to replace building your own client since EDD does not support it.

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I forgot my User ID and password.

Contact EDD's Electronic Systems Customer Service, Monday through Friday, 8 a.m. to 5 p.m., Pacific Time at (800) 796-3524.

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I need my password reset.

If you forget your password, go to the e-Services Logon page to obtain your password hint electronically. If you still can't remember your password, you can reset it yourself by clicking on the "reset my password" link. You will be e-mailed a temporary password. When you log on with the temporary password, a pop up window will appear prompting you to change the temporary password to a new password.

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Can employers who are required to file their DE 6 on magnetic media or electronically be allowed to use FSET?

Employers who are required to file their federal wage reports magnetically or electronically (those with 250 or more employees) must also file their DE 6 magnetically or electronically. Filing with FSET fulfills this requirement.

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Will FSET be taking the place of magnetic media? When is this scheduled to happen?

FSET was implemented to replace obsolete technology and to provide more security for transmitting your payroll tax data. EDD has phased out Electronic Data Interchange (EDI) and reel tapes. Magnetic media cartridges will be the next technology to be phased out. However, at this time, no date has been designated.

Please check our Web site to stay current on the latest information on electronic reporting options.

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What is a Wage Plan Code on the DE 6?

The Wage Plan Code indicates the types of benefit coverage employees have for their Unemployment Insurance and Disability Insurance and is correlated with your employer account number. This is a required element for each employee on the DE 6.

S = Employee is covered under a State Plan for both Unemployment Insurance and Disability Insurance.

U = Employee is covered under a Department approved Voluntary Plan for Disability Insurance and the State Plan for Unemployment Insurance.

J = Employee is covered under the State Plan for Disability Insurance only (exempt from Unemployment Insurance).

L = Employee is covered under a Voluntary Plan for Disability Insurance only (exempt from Unemployment Insurance).

R = Employee is covered under the State Plan for Unemployment Insurance but is exempt from Disability Insurance. This applies only to Sole Stockholders who claim an exemption under Section 637.1 of the California Unemployment Insurance Code (CUIC); Third Party Sick Pay recipients who claim an exemption under Section 931.5 of the CUIC; and the employees claiming a Religious Exemption under Section 2909 of the CUIC. The employee must file an exemption certificate for the religious exemption.

A = Employee is covered under the State Plan for Unemployment Insurance. This applies only to public entity employees.

P = Employee is covered for Personal Income Tax withholding purposes only.

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How do I report a "no payroll" DE 6 or DE 7 return?

To report a "no payroll" DE 6 return, using FSET, include the "NoPayrollElect" tag with the value "X". For the DE 7, include the "NoPayrollAnnualElect" tag with the value "X".

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How do I report a supplemental DE 6 or DE 7 return?

The FSET program has the capability to report a supplemental DE 6 return by entering the enumeration "Supplemental" in the "FilingAction.Action" tag in the file. DE 7 supplemental returns are not accepted.

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How do I report an amended DE 6 or DE 7 return?

To amend a DE 6 or DE 7 return, please submit a paper Tax and Wage Adjustment Form (DE 678).

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How many quarters back can I file a DE 6 return through FSET?

You can file a DE 6 return through FSET back six quarters (current quarter + five prior quarters).

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How many years back can I file a DE 7 return through FSET?

You can file tax years 1995 through the current year, with the exception of tax year 2000. For the year 2000, please complete a paper DE 7X.

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In production, how will data file errors be handled?

The EDD Gateway will return a transmission acknowledgement (ACK1) for each transmission received.

All returns within each transmission will then be validated and an acknowledgement (ACK2) will be created for each return for retrieval at a later time. If the ACK2 states that there is an error(s) in the return, the return must be corrected and retransmitted to EDD. If the transmission has returns with errors, only the erroneous returns should be resubmitted with the corrections. If there are no errors in the return(s), the ACK2 will contain a confirmation number for the return.

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What happens if I send bad returns time after time?

EDD reserves the right to suspend the electronic filing privilege of any participant who varies from the requirements, specifications, and procedures stated in the FSET Implementation Guide or any corresponding administrative rules, or who does not consistently transmit correct returns. When suspended, the participant will be advised of the requirements for reinstatement into the program.

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What are the FSET filing deadlines?

The DE 6 is due at the end of the month following the quarter end date.

The DE 7 is due by January 31 each year.

Due dates are provided in the current issue of the California Employer Guide (DE 44).

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Why Web Services instead of File Transfer Protocol (FTP)?

We are not using FTP because FTP is only used for sending and retrieving files. Web Services can return acknowledgements and errors and allows us to interact with our transmitters. This allows transmitters to correct their returns in many cases without manual intervention.