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ASK THE EDD LAWYER – HOW TO HANDLE AN ANCIENT EDD DEBT

By Robert S. Schriebman
2017

Introduction

I do not believe that a week goes by in my law practice when I do not hear from a stressed-out caller concerned about a debt that he or she owes to the EDD from the 1980s or 1990s. These well meaning and concerned people ask if the statue of limitations for collection has expired and what the EDD can do to them today. The story is familiar. The caller had an EDD debt that was originally a couple of thousand dollars. Over the years the debt has mushroomed to $30,000 or $40,000.

This article will discuss most of the common concerns of these callers and will also provide a tip or two on how to handle an ancient EDD debt today.

How Long Does The EDD Have To Collect An Ancient Debt?

The IRS has a basic 10-year statute of limitations for collection. The FTB has a basic 20-year statute. Unfortunately the California Legislature pays no attention to what the EDD does or how long they can collect your tax debt. In other words, there is no statute of limitations that relates to the EDD. There is currently only a provision in the California Constitution that deems debts owed to the State unenforceable after 30 years. This is not much comfort.

What Does The EDD Do In The Real World To Collect An Ancient Debt?

Going back a few years in my memory, including facts on the ground today, I do not see the EDD aggressively engaged in actively undertaking enforced collection action on ancient debts. I do see letters sent entitled, "Statement of Account" that tells the taxpayer how much is owed today on that ancient debt. I do not see bank accounts levied or wages garnished. That is not to say this could not happen.

If you owe an ancient debt, it is my suggestion that you keep a low profile. If you call the EDD in response to recent correspondence you will be put in touch with a collector who will want to set up a payment plan and will also most likely file a Notice of State Tax Lien against you. So I suggest that you put the EDD's letter in a safe place and wait for the EDD to call or send you an email. However, as I said earlier, I do not see the EDD aggressively collecting these ancient debts.

Will The EDD Take My House?

Historically the EDD is about the only taxing agency that is not interested in taking your house or filing criminal charges against you for evading the payment of your ancient debt. The EDD will consider the seizure of a residence, or other real property, if there has been underlying criminal activity such as, a conviction for being a major drug dealer or high profile criminal.

How To Fight The EDD On Your Ancient Debt.

I do not recommend your retaining professional representation when it comes to fighting back against the EDD's effort to collect an ancient debt. Why spend the money? There are actions you can do on your own. Besides, there are no provisions in the law allowing you to sue the EDD for what you believe to be taxpayer harassment. You cannot recover fees from the EDD.

Several months ago I received a call concerning an ancient EDD debt. I made a few suggestions to the caller that I will pass onto you. Recently this caller informed me that by following my suggestions below he was able to convince the EDD to CANCEL his ancient debt. He called to thank me for the advice. Here is what I told him to do and he followed through:

  • The best place to start your fight within the EDD is to initially contact the EDD's Taxpayer Advocate Office. You can go online to the EDD's Website or call a toll-free number - 1-866-594-4177. The Advocate's office is independent from the EDD and has a lot of power within the EDD to do whatever it takes. Your matter will be assigned to an agent who will open a file for you and start investigating the origin of you ancient debt.
  • Explain clearly what concerns you about your debt. You might want to make a topic outline before you call.
  • It is my belief that no one should pay the EDD or IRS one dime more than is actually owed. In the commercial world, a creditor cannot prevail in court if that creditor cannot prove the origin of the debt. Why should it be otherwise for the EDD? To this end I recommend you do the following:
    • - Ask the Advocate for copies of all documentation relating to how your debt was originally established. Ask, for a copy of the original case file. The chances are excellent that the EDD today only has data of your debt on a computer screen. Your original files most likely have been destroyed as a matter of EDD standard operating procedures.
    • - Be prepared to wait as long as three months before you hear back from your Advocate representative.
    • - Most likely your Advocate representative will not be able to produce any original records at all.
    • - If the EDD cannot produce any original records, then the EDD has no way of proving the original and legality of your ancient debt.
  • If the EDD cannot produce any proof of the original assessment against you, you have the right to ask the Advocate to cancel or abate the debt in its entirety. This indeed may be your lucky day!

Conclusion

The above approach and recommendations worked for my happy caller. The EDD Taxpayer Advocate cancelled the ancient debt. Having said this there is no way that I am assuring, promising, or guaranteeing that you will meet with the same success.

When contacting the EDD Taxpayer Advocate and having that office undertake your matter, you are going on the EDD's current radar and you must understand this risk of exposure.

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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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