Guide to the California Hazardous Waste Environmental Fee

Guide Resources

Locations
California
Agencies
Department of Tax and Fee Administration Department of Toxic Substances Control
Forms
Environmental Fee Return

This article is provided for educational purposes only. Information presented here does not constitute legal, financial, or other advice. Consult with appropriate professionals before preparing and filing any documents.

This guide is an overview of the California Hazardous Waste Environmental Fee and provides a summary of relevant laws and regulations, filing requirements, costs, deadlines and other considerations.

What is the California Hazardous Waste Environmental Fee?

Effective January 1, 2007, all California businesses and organizations that generate, use, or store hazardous waste or perform activities related to hazardous waste must pay a fee to the state government. This fee is a type of a Hazardous Substance Tax and is officially called the "Hazardous Waste Environmental Fee" but is often referred to simply as Environmental Fee.

Why is the Environmental Fee collected in California?

The Environmental Fee provides revenue for protecting California's communities and the environment from toxic contamination, site remediation and cleanup programs, and promoting safer consumer products.

Which California laws or regulations govern the Environmental Fee?

The Hazardous Waste Environmental Fee is imposed by Health and Safety Code (H&SC) § 25205.6 in accordance with the Hazardous Substances Tax Law. Senate Bill 158 adjusted fee rates and increased the minimum number of qualifying employees required for organizations to pay the Environmental Fee starting with 2022.

Which California government agencies handle the Environmental Fee?


Who is required to pay the California Hazardous Waste Environmental Fee?

The following types of organizations must pay the annual Environmental Fee if they are engaged in activities connected with hazardous materials and have 100 or more employees who are each employed more than 500 hours in California during a calendar year:
  • All corporate entity types
  • Limited Liability Companies
  • Limited Liability Partnerships
  • General Partnerships
  • Limited Partnerships
  • Sole Proprietorships
  • Professional Employer Organizations

The Environmental Fee return must be filed even if an organization has no tax liability. Organizations with fewer than 100 qualifying employees or wishing to claim an exemption must still file a return.

The fee is due even if an organization's activities stopped, as long as it employed at least 100 employees in California for more than 500 hours each during the calendar year. If your business is sold or closed, you must notify the CDTFA and file a final return by the last day of the month following the quarter in which the company is closed or sold.

Who is exempt from paying the Environmental Fee in California? 

Organizations are exempt from filing the Environmental Fee return if they fall into one of these categories:

If your organization is notified of the fee but qualifies for an exemption, you must still file a return and include a statement explaining why you are eligible.

How does the California Department of Tax and Fee Administration define "hazardous waste"?

The CDTFA has adopted two broad criteria for identifying hazardous materials, as outlined in Health & Safety Code § 25117 and H&SC § 25141. Hazardous waste is defined as any substance or combination of materials that, because of the quantity, concentration, or physical, chemical, or infectious characteristics, may do either of the following:
  1. Cause or significantly contribute to growth in mortality or an increase in serious irreversible or incapacitating reversible illness.
  2. Pose a substantial present or potential hazard to human health or the environment due to factors including carcinogenicity, acute toxicity, chronic toxicity, bioaccumulative properties, or persistence in the environment when improperly treated, stored, transported, disposed of, or otherwise managed.

To "use hazardous materials" and to "conduct activities related to hazardous materials" means any use or handling, in any amount or to any degree, of one or more substances or wastes that are included in any reference listed in subsection (b) of California Code of Regulations § 66269.1 or if that use or handling is related in any way to the operation or maintenance of the organization.

Hazardous materials include any product or equipment containing hazardous components or fuel made from hazardous ingredients. Activities related to hazardous materials include using products such as ink, paint, plastics, etc., manufactured from hazardous substances.

How are employees counted for the purposes of the California Environmental Fee?

"Qualifying employees" are persons who are each employed more than 500 hours in California during the previous calendar year. Effective January 1, 2022, the minimum qualifying number of employees is 100. Prior to 2022, the minimum threshold was 50 or more employees.

The term "employed" covers all hours an employee is paid, including vacation, holiday, illness, on-call, or personal time off (PTO). If a person terminates employment, then holidays, sick leave, or other severance pay are not included in calculating the number of qualifying hours.

If two or more businesses are connected by common ownership or management, or if one enterprise is a subsidiary of another, a person is considered the employee only of the organization for which they most directly provide services.

How much is the California Environmental Fee?

Hazardous Waste Environmental Fee rates are revised annually by the Board of Environmental Safety and are based on the number of qualifying employees. Current fees are published on CDTFA's Special Taxes and Fees page and DTSC's Environmental Fee page.

Effective January 1, 2022 (22-23 fiscal year) the Environmental Fee rates are:
  • fewer than 100 employees: $0
  • 100 to 249 employees: $1,261
  • 250 to 499 employees: $2,706
  • 500 to 999 employees: $16,000
  • 1000 or more employees: $54,100

For the 2023-24 fiscal year the rates will increase to:
  • fewer than 100 employees: $0
  • 100 to 249 employees: $2,522
  • 250 to 499 employees: $5,412
  • 500 to 999 employees: $32,000
  • 1000 or more employees: $108,200

Beginning with the 2024-25 fiscal year, the rates will be adjusted annually to account for changes in the cost of living during the previous year.

When is the California Environmental Fee due?

The Environmental Fee return is due on or before the last day of February for the previous calendar year
  • The 2021 return is due February 28, 2022, if an organization had 50 or more qualifying employees during the 2021 calendar year.
  • The 2022 return is due February 28, 2023, if an organization had 100 or more qualifying employees during the 2022 calendar year.

Returns and payments that are mailed must be postmarked on or before the due date shown on the return. If the due date falls on a weekend or legal holiday, returns postmarked on the next business day are considered timely.

To avoid receiving a delinquency notice, you must file a return online, even if you employ fewer than 100 qualifying employees or wish to claim an exemption. If you pay the fee but do not file the return on time, you may be liable for a late filing penalty.

Late returns and payments are subject to a penalty of 10% of the fee amount plus interest as specified in the Revenue and Taxation Code (RTC) § 43155

How do I file the California Hazardous Waste Environmental Fee return and pay the fee?

Starting January 1, 2022, all returns must be filed online. Registered taxpayers should log in to their online services account using their username and password to complete and file their return with the CDTFA.

To create a new account, you will need your Environmental Protection Agency (EPA) number and Employment Development Department (EDD) number. For more details, visit CDTFA's Information Needed to Register for a Permit, License, or Account page. Fees can be paid online or by calling (855) 292-8931. Additional payment options are outlined on CDTFA's Online Services page.

For returns before the 2022 calendar year, Environmental Fee Return (CDTFA-501-EF) form can be used to file by mail.

How do I complete and file the California Environmental Fee Return (CDTFA-501-EF) form?


Starting January 1, 2022, Environmental Fee returns must be filed online. CDTFA-501-EF form can only be used for returns prior to 2022.

  • Line 1: Indicate whether the organization operates in the state of California. This includes all general partnerships, limited partnerships, limited liability partnerships, limited liability companies, sole proprietorships, and all corporate entity types.
  • Lines 2 through 8: Enter the total number of organizations for which you are reporting in column B. If you are reporting for more than one organization, complete the "Environmental Fee Schedule - Summary of Corporations or Other Organizations" on the reverse of the return form. Be sure to include the corporation or organization listed on the front of the return in the appropriate fee category total. Multiply column B x C and enter the result on the applicable line of column D.
  • Line 9: Add the total amount of the fees entered in column D.
  • Lines 10 and 11: If you pay the fee and file the return after the due date shown on the front of this return, additional amounts are due for penalty and interest charges. The penalty is 10 percent (0.10) of the amount of the fee owed. The interest rate is noted on line 11 on the front of this form and applies for each month (or portion of a month) that payment is received after the due date.
  • Line 12: Enter the total amount due and payable by adding lines 9, 10, and 11.

Include your CDTFA account number if paying by check or money order.

Mail the completed CDTFA-501-EF form to:
California Department of Tax and Fee Administration
Return Processing Branch
PO Box 942879
Sacramento, CA 94279-6001

Who can I contact with questions about the California Environmental Fee?

Contact the California Department of Tax and Fee Administration for more information.

Website: cdtfa.ca.gov

Phone: (800) 400-7115 (Monday-Friday, 8 am to 5 pm PST)

Mail:
California Department of Tax and Fee Administration
Special Taxes and Fees, MIC:88
PO Box 942879
Sacramento, CA 94279-0088

References

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