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ASK THE EDD ATTORNEY – ARE YOU BEING AUDITED BY THE EDD? HOW TO FIND QUALIFIED REPRESENTATION

By Robert S. Schriebman

August 13, 2015

Introduction

Are you being audited by the EDD for treating workers as independent contractors? Are you thinking of retaining professional representation? How do you find someone who is qualified to effectively represent you?

I have had clients retain me who have been represented by other people. These clients were not happy with their former Attorney or CPA. But I have had 2 disturbing incidents I want to call to your attention that did not involve an Attorney or a CPA.

The first client was represented by an "HR" individual. (I assume HR stands for Human Resources.) This person is not a lawyer or a CPA or an Enrolled Agent. Enrolled Agents are tax practitioners who are not Attorneys or CPAs. They have taken a specialized examination through the Treasury Dept. and IRS to qualify for practice before the IRS. I admire these people; it's a hard test. However, an HR person has taken no professional examination for tax competency.

The second client was represented by someone who simply held himself out to the public as qualified for EDD representation. This person had absolutely no professional credentials whatsoever. A review of the client's paperwork painted a picture of a potential disaster if the client would have remained with this person.

In this article I will discuss the requirements for practice before the EDD and I will give you my thoughts on what to look for in a qualified professional.

EDD Standards For Professional Representation - None!

I know from representing clients over the years before the IRS and FTB that both agencies have strict requirements for professional representation. Not just anyone can file a valid Power of Attorney with either agency. For example, you cannot practice before the IRS unless you fall into one or more of three categories:

  • An Attorney at Law, currently licensed to practice in a specific state, and in good standing.

  • A Certified Public Accountant (CPA)

  • An Enrolled Agent.

The FTB has the same requirements.

Of course, having one of the above qualifications does not guarantee the public that the practitioner is experienced and knowledgeable. We will talk more of this later in this article.

The EDD, on the other hand, appears to have absolutely no requirements for anyone to practice before that agency. So anyone can hang up a shingle and declare himself or herself an EDD representative. I find this very disturbing.

Economic times are still difficult. Even Attorneys and CPAs fear losing clients if they refer an EDD audit out of the office. They take on a highly specialized matter with no experience hoping to make a few calls here and there for pointers from more experienced practitioners. In my opinion they put their client at risk for potentially disastrous results.

Take the case of the inexperienced CPA. This inexperienced CPA allowed the protest-appeal time for an assessment to expire. This caused the potential assessment to become final and subject to collection and payment first, with appeal rights only after the assessment was paid in full. The CPA explained to me that after receiving the Notice of Assessment he called the EDD agent and expressed his disagreement with it. The agent promised the CPA that he would take another look at the assessment and get back to the CPA. The agent never called back. The CPA did not understand that the protest-appeal clock was ticking. He thought his call to the agent, and his expression of disagreement with the assessment, would put a brake on the protest-appeal clock. This is a common misconception with inexperience EDD practitioners. But you the client suffers from this practitioner's ignorance.

What To Look For In A Qualified EDD Practitioner

Until the EDD sets standards for practitioners allowed to practice before this agency, the public is at risk. The maxim of Caveat Emptor applies - "Let the buyer beware." According to Black's Law Dictionary this maxim summarizes the rule that the person under EDD audit must examine, judge, and test for himself.

You must also be wary that even though a practitioner is an Attorney, CPA, or Enrolled Agent those titles do not mean ipso-facto that the practitioner knows anything about the EDD or representing anyone before that agency. It is easy for a CPA, who is experienced in IRS or FTB audits, to say to himself or herself, that an EDD audit is just another audit; it is not! A practitioner who is insecure about losing a client may take on an EDD audit that he or she has no business handling. The so-called "know-it-all" practitioner is dangerous.

I suggest you consider the following qualifications when hiring someone to represent you before the EDD:

  • Is the practitioner currently licensed to practice? Is the practitioner in good standing? If you are thinking of hiring a lawyer, check with the State Bar of California website to see if he or she has not been suspended and has not had severe discipline issues in the past.

  • If you are interviewing an Attorney ask if he or she is a Certified Taxation Law Specialist.

  • Has the practitioner published articles or books on the EDD?

Ask important questions such as the following:

  • How long have you been practicing before the EDD?

  • Have you had any EDD audits involving my type of business? If so when and how many.

  • Have you previously had an audit with the auditor assigned to my matter?

  • Have you previously worked with the EDD collector assigned to my case?

Conclusion

EDD audits are highly specialized matters. They often involve different types of taxes that may be unfamiliar to practitioners who primarily do tax returns or handle IRS audits. A true EDD practitioner is a specialist in a very narrow field of law. Even though you are currently being audited by the EDD, the risk of the IRS also getting involved in your matter is a challenge for both you and your representative. Choose wisely.

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Robert Schriebman has a successful practice in the Rolling Hills Estates area of Los Angeles County serving clients throughout California and the United States. He has successfully dedicated more than 40 years to helping individual taxpayers, business owners, CPAs, Enrolled Agents, and tax attorneys navigate the complicated tax systems of the federal and state governments.

Robert Schriebman has written the only 2 books ever published dealing with how California Employment Development Department (EDD) operates. See "California Tax Collection Practice and Procedures" and "California Taxation Practice and Procedure", both published by Commerce Clearing House.

Robert Schriebman has written over 20 books including the major manual used nationally by practitioners and the IRS, "IRS Tax Collection Procedures - A Manual for Practitioners" published by Commerce Clearing House.

Robert Schriebman has written over 20 books including the major manual used nationally by practitioners and the IRS, "IRS Tax Collection Procedures - A Manual for Practitioners" published by Commerce Clearing House in addition to the only 2 books ever published dealing with how California Employment Development Department (EDD) operates. See "California Tax Collection Practice and Procedures" and "California Taxation Practice and Procedure", both published by Commerce Clearing House.

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