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ASK THE CALIFORNIA EMPLOYMENT TAX AND PAYROLL TAX ATTORNEY – NEW WRINKLES IN EDD AUDIT FORUM SHOPPING

By Robert S. Schriebman

2018

Introduction

The EDD Employers’ Bill of Rights states, "If your business is selected for an audit, EDD will attempt to schedule the audit at your convenience." The EDD historically has been liberal when scheduling both a time and a place for an audit. The EDD is usually cooperative in transferring an audit to an EDD office that is more convenient for both the employer and the representative than the initially designated field office. For example, a representative located in Northern California may request that the audit be transferred from a Southern California audit office. In the process of transferring the audit, much time may elapse between the transfer request and the date the representative is notified that a new auditor at a new location has been assigned. It is not uncommon for six months or more to elapse before being notified of a newly assigned auditor. The EDD has been trying to shorten the lag time by instituting more efficient internal policies and procedures.

The EDD has taken steps to streamline the transfer process so that transferred audits are scheduled with efficiency and that the transferred audit is completed promptly. This article will discuss the latest internal EDD policies that have been called to my attention.

The EDD’s Policy to Streamline Transferred Audits

Several years ago many transferred audits could wind up in "never land" and get lost in the system. In those early days it was not uncommon to assume that the audit was lost in a "black hole," if more than one year went by without any contact from the transferred field office. Some of these transferred audits were resurrected after over two years from the time the transfer was requested! I am happy to say that those days may be over.

The EDD has added quite a few new auditors over the past couple of years, and has assigned them to older cases and transferred cases. The odds of the transferred audit getting lost in the system, is not as great as it was three years ago.

Here are the new EDD audit transfer policies that have been called to my attention as of this writing:

  • The EDD’s goal is to audit transferred cases with alacrity – promptness. This means that an EDD auditor will be sent to the office of the taxpayer’s representative or the taxpayer’s business. Correspondence-type audits where documentation is sent directly to the audit office is no longer acceptable. There will be a face-to-face engagement with the assigned EDD auditor.
  • Once a new auditor has been assigned and has requested documentation and other information, the auditor must receive all of this within 30 days of the request. Failure to timely provide requested documentation and information may result in the audit being transferred back to its original audit office.

Conclusion

The EDD is still very willing to work with the employer-taxpayer, and the representative in transferring audits to a forum more convenient. However, once the transfer request has been granted, it is incumbent upon the representative and the employer to start gathering up at least the usual documentation necessary to begin the audit process.

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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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