ASK THE CALIFORNIA EMPLOYMENT TAX AND PAYROLL TAX ATTORNEY – WHY AM I GETTING THIS EDD COLLECTION NOTICE? WHAT CAN I DO ABOUT IT?
By Robert S. Schriebman
The title of this article could have been, “The USPS Is Dropping the Ball on Delivering EDD Assessment Notices.” Here is the story: XYZ, Inc. has been under audit by the EDD for several months. Documents have been delivered to the auditor and there have been several exchanges of emails. Suddenly all is quiet. XYZ has not heard anything for several months. Today however, XYZ receives a letter from an assigned EDD collector demanding the immediate payment of $100,000! Is XYZ stuck with the bill? XYZ is afraid that its bank account is going to be levied by the collector without warning. A Notice of State Tax Lien may also be filed damaging XYZ’s ability to borrow money to meet its cash flow needs.
Strange Things Are Happening
I am seeing this type of pattern at an increasing rate. Why has this happened to XYZ? And what can they do about it?
This article will take a look at a very disturbing breach of employer-taxpayer due process rights within the EDD. This is not an isolated incident. It seems to happening at an alarming rate. You will learn that if this happens to you, you are not helpless. There are steps you can take to investigate what happened during your audit and how stop the collector from taking enforced collection action against your company.
What Steps Must You Take Immediately?
There Are Six Steps That I Recommend You Take To Protect Your Rights To Due Process of Law
Simply put due process of law means that you have a right to notice and an opportunity to be heard. Due process rights are found in both the US and California Constitutions. Judges are very keen on protecting due process rights.
Here are the steps you should take to protect your right to due process:
1. The first step to take is to contact your assigned EDD auditor and ask why you have received a collection notice when you never received a Notice of Assessment. The chances are that your auditor will tell you that your audit was completed several months ago and that a Notice of Assessment was issued to you. The reason you received the collection notice was due to the fact that you failed to timely file a petition with the CUIAB.
2. The second step is to request a copy of the Notice of Assessment together with proof that it was sent to you by certified mail. This proof will usually be in a form of a Post Office receipt with a bar code showing a tracking number. This bar code is part of USPS Form 3800. The EDD is now sending out all Notices of Assessment via certified mail.
3. The third step is look up the tracking number on the USPS website. Obtain a printout of the status report showing when the EDD delivered your assessment notice to the post office and a history of the transit of the Notice.
Several of the case histories that I have investigated show that the USPS, while receiving the Notice from the EDD, has repeatedly failed to deliver that Notice to the employer-taxpayer!
The EDD has chosen the USPS as its agent for the delivery of the Notice of Assessment; the USPS has dropped the ball. You are in collection through no fault of your own.
4. The forth step is to contact the assigned collector and show the collector that the Notice was never delivered to you. Request that the collector hold off on collection in order for you to file a late petition with the CUIAB. If the collector refuses your request, ask to speak with his/her manager. If the manager does not respond to you, or refuses your request, your next step is to contact the EDD Taxpayer Advocate Office.
5. The fifth step is to request that the Advocate contact the collector to stop all collection in order for you to file a petition with the CUIAB.
6. The sixth step is to prepare and file a petition with the CUIAB and ask the CUIAB to consider your late petition as timely filed. Attach a copy of the Notice of Assessment as well as the USPS tracking history to your petition. Eventually the CUIAB will assign your matter to a judge who will conduct a hearing to determine if there is good cause allowing you to treat your late petition as timely filed.
If you can persuade the judge that the EDD did not protect your rights by assuring that the USPS timely delivered the Notice of Assessment your late petition may be deemed timely filed. If you win, you will receive a written decision from the judge allowing your late petition as timely filed.
A timely filed petition means that you do not have to pay anything to the EDD collector. You have the right to have the merits of your matter heard by the CUIAB in the future. You also have a chance to settle your matter through the EDD’s Settlement Unit.
A petition for review or reassessment must be filed within 30 days of service of a notice of assessment or denial of claim for refund. An additional 30-day period may be granted by the administrative law judge (ALJ) upon showing good cause. If a petition is not filed within the 30-day period, or within the additional period of time granted by the ALJ, the assessment or denial of claim for refund is final at the expiration of the period. (CUIC §1222) However, if you can show that the EDD failed in some way to provide you with due process of law, you will have additional time to file a timely petition
The EDD has the burden of proof to show proper service of the Notice of Assessment. If no certified mail receipt was signed and returned to the EDD and the USPS tracking information shows that the Notice was in transit but never actually delivered, the taxpayer-employer will have establish that the Notice from the EDD was not received. This should be sufficient to allow the late filed petition to be deemed timely filed.
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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