ASK THE CALIFORNIA EMPLOYMENT TAX AND PAYROLL TAX ATTORNEY – HOW TO GET A LATE FILED CUIAB PETITION DEEMED TIMELY FILED – PART 2
By Robert S. Schriebman
This is Part 2 of a 2-Part series that will discuss the timeliness of a petition. Most EDD audits result in the EDD issuing a Notice of Assessment. In this part we will review the basic time limits for filing a petition with the CUIAB and we will review a case study where the employer-petitioner presented an unsuccessful argument. Before doing so however, let’s review the basic rules for timely filing a petition before the CUIAB.
Basic Rules For Timely Filing
An EDD Notice of Assessment usually has two dates set forth in the upper right-hand corner: an issue date and a mail date. The mailing date is usually later than the date of issuance although some Notices use the same date for both. A timely petition must be filed with the CUIAB no later than 30 days after the date of service of the Notice of Assessment. An additional 30 day period is allowed for good cause. There is no specific law telling us which of the two dates on the Notice marks the beginning of the first 30-day period. Is it 30 days from the date of issuance or 30 days from the date of mailing? Service on the employer-petitioner begins to run on the date of the mailing of the Notice of Assessment.
The problem comes when a petition is filed weeks or even months after the expiration of the basic two 30 day periods just discussed. Is it possible to treat a petition that is filed way after both of these 30 day periods have expired as timely?
If a petition is filed weeks or even months after the issuance or mailing dates, you can expect to have a judge hearing. During that hearing the judge will listen to testimony and reach a decision on whether a very late dated petition can be deemed timely filed.
These procedures can be very important especially when the EDD has levied on the employer-petitioner’s bank account because the assessment filing period has been defaulted. A defaulted assessment is turned over to an EDD Collector who will levy on the employer-petitioner’s bank account with no prior notice or warning. However, if a judge rules that a late filed petition is deemed timely filed, all collection action must stop immediately. The employer-petitioner may also have the right to demand a refund on any collected levied proceeds.
In this Part 2, we will review an example of where the EDD did not violate the due process rights of the employer-petitioner in assessing a deficiency. Rather the error was the result of negligence on the part of the employer-petitioner’s representative.
Case Study # 2 – A Late Filed Petition Not Deemed Timely Filed
Facts: The employer-petitioner is in the retail flooring business. He was born and educated outside of the United States. He has no knowledge or experience in matters involving the EDD other than his obligation to file quarterly and annual State and Federal payroll tax returns. He was audited by the EDD for the period beginning January 1, 2015 through March 31, 2018. During the audit he was represented by his accountant who told him that he was highly experienced in handling EDD audits.
A Notice of Assessment was issued on April 15, 2018 and was sent to the employer-petitioner’s proper address. It was sent by certified mail and timely delivered by the USPS.
As soon as employer-petitioner received the Notice of Assessment he delivered it to his accountant. The accountant informed him that he was very experienced in handling audit appeals to the CUIAB and that the accountant would timely file the petition. Two weeks later, the employer-petitioner telephoned the accountant to verify that the petition had been filed. The accountant, lying to his client, told him that the petition was timely filed.
In truth and in fact, the accountant failed to timely file the petition. The petition was eventually filed by the accountant in February in 2019!
The EDD records disclosed that the employer-petitioner failed to timely file a petition. Therefore, the defaulted assessment was turned over to an EDD Collector. In March 2019 the Collector levied on the employer-petitioner’s business bank account without notice and wiped out every last penny!
Upon learning of the levy, the employer-petitioner retained my office. I filed a late petition with a request to treat the late petition as timely filed. A hearing was held promptly in May 2019.
What The Judge Ruled
A petition must be filed within 30 days of service of the Notice of Assessment; an additional 30 day period may be granted by a judge upon the showing of good cause. Judges have the discretion of granting a favorable decision even after these two 30 day periods have expired. (CUIC § 1222)
- CUIAB Precedent Decision P-T-364 states the basic two 30 day time periods discussed above. The decision also states that if the petition is filed after the first standard 30 day period, it may be considered timely if it was filed within the second 30 day extension if there was good cause for the delay.
- If the petition is filed after the expiration of both 30 day periods, it cannot be considered on the merits unless estoppel can be invoked against the EDD.
- An assessment is served on the employer-petitioner’s -petitioner when it is mailed by certified mail to the correct address of the employer as it appears on the EDD’s records (CUIC § 1206).
If a petition is filed beyond 60 days from the date of mailing, the only way it will be considered timely if it can be shown that the EDD made an error in the assessment process or other actions of the EDD creating an estoppel.
In Precedent Decision P-B-115 the appeals board set forth the elements of equitable estoppel as follows:
- The Employment Development Department, or its authorized representative, was apprised of all the facts.
- The department intended the claimant to rely on its conduct or statement or led the claimant to believe he or she could rely on it.
- The claimant was ignorant of the facts.
- The claimant relied on the department, or its authorized representative’s conduct or statement, to his or her injury.
The judge ruled that there were no errors or any type of violations on the part of the EDD. The Notice of Assessment was properly issued and timely delivered. The error was clearly with the accountant. Therefore, the late filed petition was not deemed timely filed. The EDD was justified in collecting the levied proceeds from the employer-petitioner’s bank.
Conclusion – Remedies Available To The Employer-Petitioner
An employer-petitioner caught in this situation is allowed to timely file a Claim for Refund. If the Claim is denied, or the EDD takes no action on the Claim, a Petition for Refund may be filed with the CUIAB. This will allow the employer-petitioner all the remedies and options available as if a timely petition was filed. The employer-petitioner may pursue a settlement or may request a full judge hearing on the merits.
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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