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ASK THE CALIFORNIA EMPLOYMENT AND PAYROLL TAX ATTORNEY – NEW WRINKLES IN TRANSFERRING EDD AUDITS

By Robert S. Schriebman

2018

Introduction

Historically the EDD has been quite liberal in allowing the location of an audit to be transferred between EDD Audit Offices (AAO). Audit transfers were allowed for the convenience of the taxpayer and the convenience of the taxpayer’s representative. For example, an audit scheduled the San Francisco/Oakland AAO could be transferred to the Los Angeles area if that was the location of the taxpayer’s representative. This may no longer be allowed.

New policies are now in place to prevent "forum shopping." Unfortunately unscrupulous practitioners would transfer potential audits to several locations in the hopes that the file got lost in the system. Those days may be over as the EDD has updated its inventory handling procedures to minimize the so-called "black hole" effect.

The new transfer policy allows an audit to be transferred between EDD AAOs only when the books and records of the employer are located at the new transferred site. In other words, in the above example, the audit will be transferred to Los Angeles from Northern California only if and when the necessary books and records required for the examination are located in Los Angeles.

It may still be possible when transferring the place of audit to give the assigned auditor, at the new AAO, a choice of whether to review the records on-site or to have them transferred to the auditor’s office in order to minimize transportation time and related expenses.

If the auditor elects to review the records on-site, it is important to follow several basic courtesies that I have found helps the audit process. First, have all records in an orderly fashion and clearly labeled. Second, provide the auditor with only copies of the records – never give a tax auditor original documentation as you run the risk of their being lost at the AAO site and unable to be returned. Third, provide the auditor with well-lit and comfortable surroundings so that the auditor can finish his or her examination in the least possible period of time.

Conclusion

In life one thing is certain – change. The EDD audit procedures and policies are no exception. It is clear that the old days of transferring audits solely at the request of the taxpayer’s representative are over.

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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. Mr. Schriebman is in private practice. He is not affiliated in any way with the EDD and he is not employed by the EDD or any other agency of the State of California.

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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This office does not handle:

  • Unemployment Insurance Benefits (UI)
  • State Disability Issues (SDI)
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