Ask The California Employment Tax And Payroll Tax Attorney – Filing A Late EDD Petition – Can The Collector Be Stopped?
By Robert S. Schriebman
2023
Introduction – The EDD Notice of Assessment
At the completion of an EDD audit, when the auditor finds that additional payroll taxes are owed, the EDD will issue the employer a Notice of Assessment (NA). the employer then has 30 days to file a petition with the CUIAB (The Board). The Board grants an additional 5-day grace period. A timely filed petition means that the EDD is not allowed to collect the assessment and must wait until the matter is finally determined by either a settlement or judge hearing. What happens if the employer’s petition is late, i.e., over 35 days?
Filing a Late Petition
When the allowable filing date is missed, the proposed assessment set forth in the NA becomes final and is recorded on the books of the EDD as an account receivable subject to collection. Sometimes there are valid reasons for the filing of a late petition. The Board will hold a judge hearing to determine if the late filed petition should be deemed timely filed. If the judge rules in the petitioner’s favor, the late petition will be treated as if it were timely filed. In that event, the EDD will not be allowed to collect one dime of the assessment until final resolution.
Collection During a Pending Late Petition
Is the EDD allowed to collect when a late petition has been filed but has not been heard by a judge? Is the EDD allowed to levy on the employer’s bank account or file a Notice of State Tax Lien?
Recently, I filed a late petition for a client. I believe that there were valid reasons to treat the late petition as timely filed. After the petition was filed, an EDD collector levied on the client’s bank account. Is this allowed? Yes, it is! Unless and until the judge rules that a late petition shall be deemed timely files, the EDD is allowed to engage in enforced collection activity.
Conclusion
What I find sad in my practice is the employer who either sits on the NA and does nothing, or the employer relies on a third person to file the petition in his place. Often the third person is an inexperienced accountant or tax-return preparer, not familiar with EDD or Board practice and procedure. Usually, a late petition is just that – late. There is no valid excuse that will breathe life into a defaulted NA. The lesson is clear, you ignore the filing deadline at your peril.
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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 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.
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