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ASK THE EDD ATTORNEY – GOVERNOR SIGNS INTO LAW THE REPEAL OF CUIC § 13052.5 (d). WHAT DOES THIS MEAN TO YOU?

By Robert S. Schriebman

2017

Introduction

CUIC § 13052.5 concerns Worker Information Return Penalties (WIRP). There have been many articles on this site that have discussed WIRPs and how to deal with them. Subsection (d) is perhaps the most oppressive tax statute that I have ever encountered and is a complete denial of due process. Basically, (d) states that a taxpayer has no prepayment administrative rights to attack this assessment. Things have now changed for the better. This article will discuss pending legislation dealing with subsection (d) and my wonderful telephone conference this morning with Bradley Hodges, the EDD’s Taxpayers Advocate.

Good News at Last!

Assembly Bill 1695 was introduced to repeal subsection (d) and to allow businesses receiving WIRP assessments to have full administrative due process without first having to pay the WIRP.

On Tuesday, July 18, 2017 I argued before the CUIAB that its refusal to hear refund petitions was a denial of procedural due process under both the U.S. and California Constitutions. I am awaiting the Board’s decision and will let you know what will be decided.

This morning Bradley Hodges, the EDD’s Taxpayer Advocate, called me to say that the Governor signed into law the repeal of subsection (d) effective January 1, 2018. I was flattered when he told me that the articles written on this site were influential in bringing about this great event. Glad to be of help.

What Does the Repeal of CUIC § 13052.5 (d) Mean To You?

It is clear that starting January 1, 2018 a business assessed the WIRP will not have to pay it first and try to seek a hearing second. Currently the only hearing available is in the Superior Court, but this may change in the near future. What is to be done now? The EDD must make some crucial internal policy decisions on whether to insist on payment of the WIRP for current assessment or assessments between now and the end of 2017. Mr. Hodges asked for my input.

I informed Mr. Hodges that when the legislature enacted the Taxpayer’s Bill of Rights for the FTB and the BOE, and these were signed into law by the Governor, there were no such laws for the EDD. Nevertheless, the EDD took the initiative of establishing its own Bill of Rights without legislation.

I suggested to Mr. Hodges that the EDD should consider no longer enforcing subsection (d) because it would not be fair to employers who are being assessed between now and the end of 2017. It is going to be interesting to see what the EDD will do.

Smart representatives will do whatever it takes to stall the audit process leading to the issuance of Notices of Assessment until January.

What Will Happen in 2018?

Because of the repeal of subsection (d) EDD collectors will not be able to demand that WIRPs be paid upon assessment. The EDD collector will be out of the taxpayer’s life. Like all other parts of a typical EDD Notice of Assessment, a taxpayer-employer will have a right to challenge WIRPs before the CUIAB without having to pay them first. Hopefully WIRPs will be able to be part of the normal EDD settlement procedures through the EDD’s wonderful and efficient Settlement Office.

Conclusion

Happy days are here again.

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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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