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EDD REFUND CLAIMS

Part 2 - What to Do if the EDD Rejects Your Claim for Refund

By Robert S. Schriebman

This is the second part of a two-part article discussing California EDD refund procedures. The first part discusses making a formal claim for refund and making sure that claim is timely filed. This article will discuss what to do if and when the EDD denies your refund claim.

It does not matter whether you are dealing with the IRS or the EDD. Most refund claims are initially rejected. Perhaps the government feels that if they reject most refund claims most taxpayers will simply go away. Claims can be rejected in one of two ways. The EDD can send you a letter denying your claim for refund or just do nothing. If the EDD does not expressly reject the claim, you may deem the claim rejected after 60 days from the date it is filed with the EDD.

If your claim is rejected, either formally or by the passage of time, can you file a lawsuit for refund in the California Superior Court? The answer is "no." You must first exhaust your administrative remedies before going to court. If you fail to do this, a judge will through out your claim. You could then be in big trouble because you may have lost your rights to go through the administrative process because you did not file a timely administrative appeal.

FILE A TIMELY APPEAL FROM THE EDD CLAIM DENIAL

Administrative procedures demand that upon an express written rejection or a "deemed rejection," the taxpayer must file an appeal with the California Unemployment Insurance Appeals Board (CUIAB) (CUIC § 1222 and § 1241).

After the taxpayer files an appeal to the CUIAB, the Appeals Board has ninety days to rule on the refund claim appeal. If the Appeals Board Fails to rule within that time period the taxpayer has the option of either waiting for an CUIAB formal hearing or filing a suit for refund in the Superior Court (CUIC § 1241).

MAKE A DISCOVERY REQUEST

As soon as you file your petition to the CUIAB, I recommend that you concurrently file with the EDD a formal discovery request asking for all files and records relating to your refund claim. You should obtain all accounting records form the EDD's automated computer system in order to prove, by the EDD's own records, that you have indeed overpaid.

REFUND SUIT

Suit for refund must be brought in the California State Supreme Court regardless of the amount at issue. Prior to bringing suit, the taxpayer must pay the assessment in full, file a claim, and give the EDD a chance to allow the claim or reject it. The claim is deemed rejected by the EDD if the taxpayer hears nothing after sixty days from the time the EDD receives the claim. Likewise, the taxpayer has ninety days from the time the CUIAB receives the appeal in order to allow the claim or reject it. If the taxpayer does not heat from the CUIAB after ninety days from the date the CUIAB receives the claim, the taxpayer may proceed with suit in the Supreme Court (CUIC § 1241).

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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.