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    3.  » Ask The California Employment Tax And Payroll Tax Attorney – Edd Settlements In 2024 – ‘they Ain’t What They Used To Be’ – Part 2

Ask The California Employment Tax And Payroll Tax Attorney – Edd Settlements In 2024 – ‘they Ain’t What They Used To Be’ – Part 2

By Robert S. Schriebman

2024

Introduction

This is Part 2 of a 2-Part series that will discuss the essential parts of an EDD Settlement Proposal as well as key provisions of the finalized EDD Settlement Agreement.

The essence of any settlement is compromise. Someone once said that the best settlement results when neither side is satisfied with the results. A settlement means that the employer will have to pay the EDD some money. A settlement does not mean the employer will skate away free. The EDD will entertain a settlement when it appears that the costs and risks associated with a hearing on the merits will be more costly than the EDD wants them to be.

CUIC § 1236 allows the EDD to settle civil employment tax and disputes. The EDD will generally not consider a settlement in cases that involve fraud, intent to evade, and criminal violations. Settlements are usually limited to issues involving worker classification disputes.

Elements of An EDD Settlement Proposal

All settlement proposals must be in writing and submitted to the proper EDD Settlement Unit as follows:

  • Employment Development Department
    Settlements Office, MIC 93
    PO Box 826880
    Sacramento, CA 942280-001
    Fax: 916.653.7986
     
    Note: Always get proof of mailing and send by certified mail.
     
  • State your EDD employer tax account number, and the CUIAB case number.
  • State the specific dollar amount of the EDD assessment you are offering to settle. If possible, attach a copy of the Notice of Assessment.
  • State the basis of your offer, including the amount of your offer and the terms of payment.
  • Explain the risks of loss to the EDD and estimate the cost of a hearing on the merits before the CUIAB.
  • Explain why your settlement offer should be accepted.
  • State your contact information – name, address, email and phone number.
  • Sign and date your proposal.

Important Things You Need to Know About an EDD Settlement Agreement

  • Payment in full is generally required within 30 days after the CUIAB approves the Settlement Agreement. If payment cannot be made within that time, a 15% penalty will be charged pursuant to CUIC § 1135 and interest will begin to accrue at the rate of 3%.
  • The employer must agree to prospectively report all worker classifications at issue in the case. Beginning at a specific future date, the employer will begin reporting the types of workers at issue and pay the appropriate withholding taxes.
  • As part of the settlement process, the EDD considers an interim assessment period. This means the period between the date of the Notice of Assessment and the Settlement Agreement date. These additional taxes are paid in addition to the proposed settlement amount and cannot be settled. For example, if the assessment covered the period of January 1, 2021 through December 31, 2023, but the final settlement date is July 1, 2024, the interim assessment period may add an additional 6 months of assessment to the agreed settlement amount.
  • The EDD cannot waive its statutory right to conduct another audit at a future date.

Conclusion

EDD settlements ‘ain’t what they used to be.’ With the enactments of AB5 and AB2257, the EDD now takes the position that its risk of loss is not as great as in the past. The EDD believes that it will prevail and has little if any risk of losing an ALJ hearing on the merits.

All settlements are based upon timely filed CUIAB petitions and timely filed Claims for Refund if the Claim has been denied by the EDD or deemed denied by the passage of time. A defaulted Notice of Assessment will not be subject to settlement unless that assessment is paid in full, and a Claim for Refund is on file with the EDD.

***

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 50 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.

Web Site Article 784