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ASK THE EDD LAWYER – DOES THE EDD HAVE A MEANINGFUL AND WORKABLE TAXPAYER BILL OF RIGHTS

By Robert S. Schriebman

May 18, 2015

Introduction

The IRS has had in place a meaningful and workable taxpayer's bill of rights for many years. The IRS version of the taxpayer's bill of rights (TBR) has been amended and supplemented several times over the past 20 years or so. At the end of March 2015, the IRS issued a Fact Sheet known as FS-2015-18 (March 31, 2015). The purpose of the fact sheet is to announce that the IRS will be taking many provisions of the several versions of TBR and grouping them into 10 identifiable categories.

FS-2015-18 reminds the public that they have a right to expect a tax system that will consider facts and circumstances that may affect their underlining liabilities and their ability to pay outstanding federal tax deficiencies. Taxpayers have a right to seek assistance from the Treasury Department's Taxpayer's Advocate Service if they are experiencing financial difficulty or if they are having trouble with tax issues within the tax system.

After reviewing FS-2015-18, I began thinking about the EDD version of TBR and whether or not the EDD really has your back. This article will discuss the nature and the extent of the current EDD version of TBR and what can be done to create real protection for the California business person.

Looking at The EDD Taxpayer Bill of Rights

EDD Taxpayer's rights are found in sections 1231 through 1237 of the CUIC. There are only 4 code sections as follows:

  • Section 1231 is solely devoted to an EDD program of public education especially to the small business community.
  • Section 1233 deals with certain relief from taxes, penalties and interest for the failure to make timely returns or timely payments due to reasonable cause. This is a long and complicated code section that in reality provides very little if any relief.
  • Section 1236 is devoted to working with the EDD Settlement Office. I favor resolving cases by settlement as opposed to formal judge hearings.
  • Section 1237 protects informants from being terminated by their employer.

That's it! That is the entire formal legislated EDD Taxpayer's Bill of Rights. Nothing is written about protections from overzealous EDD auditors or EDD collectors. Nothing is written about allowing the taxpayer to meet and to confer with a tax professional before the audit. When compared to the several IRS versions of TBR, the EDD version pales in comparison.

EDD Publication DE 195

EDD Publication DE 195 is entitled "Employers' Bill of Rights." It has been around since 2003. This publication is a matter of EDD policy as opposed to enacted legislation. DE 195 explains the 4 statutes discussed above, but it also has important information such as, your right to an impartial audit. A good portion of DE 195 is devoted to collection issues, such as payment plans and offers in compromise (OIC). However, there is no language assuring taxpayers that they have a right to set up an installment payment plan if they owe the EDD and cannot pay.

Towards A Workable Taxpayer-Friendly Bill of Rights

I have been working with the EDD representing taxpayers under audit and with collection issues for over 3 decades. If I have a problem with a particular auditor or collector I can usually work things out to my client's benefit with a phone call to a superior. However, not everybody can do this. Therefore I would like to see a taxpayer bill of rights that provides the following minimum taxpayer protections:

  • The right to consult with a tax professional before a scheduled audit - even if this means the audit has to be rescheduled.
  • The right to have an audit conducted at a location convenient to the taxpayer's representative - even if the audit has already commenced.
  • The right to an objective audit conducted by a non-biased auditor. All too often there is hostility between the auditor and the taxpayer before the audit even begins. No taxpayer should be bullied by an auditor or a collector.
  • The right to change an auditor or a collector if the taxpayer or his or her representative believes there is hostility or bias coming from the EDD.
  • The right to an administrative appeal within the EDD examination division to hear disputes involving worker status determinations prior to the issuance of a final Notice of Assessment.
  • The right to a collection due process hearing prior to any enforced collection action or the filing of a Notice of State Lien.
  • The right to a monthly installment payment arrangement if you owe the EDD $50,000 or less.
  • The right to request the EDD not file a Notice of State Lien if you can prove that the filing will damage your credit rating.

Conclusion

The EDD and the California State Legislature should take a page out of the IRS's attempt to establish true taxpayer's rights in both the examination and the collection processes. Real EDD taxpayer's rights should be a matter of law and not mere internal EDD policies that are subject to changes at will.

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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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