ASK THE EDD ATTORNEY – How Do I Get Rid Of A “Bogus” EDD Tax Lien – It’s All About Due Process Of Law
By Robert S. Schriebman
They seem to come out of nowhere; they damage your credit rating; they are inaccurate and cause you nothing but grief. Sometimes it seems like the EDD files a tax lien against you out of spite. Here is a real-life story that happened to one of our clients a short time ago.
Ajax Corporation (Ajax) was audited by the EDD for the period beginning April 1, 2009, and ending March 31, 2012. There were no further assessments made by the EDD for any tax period after the first quarter of 2012. What is an EDD “assessment?” An assessment means that the EDD issues a formal Notice of Assessment. This Notice affords the taxpayer “due process.” Due process simply means that a taxpayer, subject to an assessment, has a right to have notice of the assessment and an opportunity to challenge that assessment; in other words, the taxpayer has a right to be heard. In the case of Ajax, the EDD issued a Notice of Assessment, and we timely filed a petition. Ajax currently has its petition pending with the CUIAB to challenge the assessment for these periods.
I can tell you from much past experience that the EDD is not allowed to take any collection action while a valid petition is pending before the CUIAB.
Recently, Sarah, the president of Ajax, called to inform me that she was receiving all kinds of letters offering assistance from “tax lien chasers.” They informed her that the EDD has recently filed a series of Notices of State Tax Liens against the company. About ten days ago, Sarah received a letter from the EDD entitled “Notice of Intent to Offset Your Federal Income Tax Refund.” In other words, the EDD had begun a campaign of enforced collection action against Ajax for these “bogus” liens.
We obtained copies of three tax lien notices for three of the remaining quarters of 2012 that were not involved at all in the EDD’s audit of Ajax. Please understand the liens we have obtained were not part of any audit, and Ajax never received any type of Notice of Assessment for any of these three lien periods. What to do?
Like I said at the beginning of this article, these three new liens came out of nowhere. They were in the process of damaging Ajax’s credit rating. They were inaccurate and were causing Ajax nothing but grief.
If this happens to you I suggest that you get on the EDD’s web site and contact the EDD Taxpayer Advocate. This is exactly what we did in this case. A few days after we contacted the Advocate we were put in touch with a representative of the EDD Collection Division. The collection representative had obtained the file and discovered that someone, unknown, had issued tax liens because Ajax had not filed quarterly returns for the second, third, and fourth quarters of 2012. This unidentified individual decided to estimate, out of thin air, deficiencies for these three quarters, and issue a separate Notice of State Tax Lien for each quarter without so much as issuing any type of Notice of Assessment. This is a blatant violation of due process!
After speaking with the nice lady from the Collection Division, and learning that my client’s basic due process rights were violated, I again contacted the Taxpayer Advocate to have the liens removed. I was successful. We are now waiting to see if the EDD will do things the legal way and issue a proper Notice of Assessment in my client’s 2012 matter.
An EDD lawyer, Robert Schriebman has a successful practice in the Rolling Hills Estates area of Los Angeles County serving clients throughout California and the United States.
As a trusted EDD attorney, Robert S. Schriebman has successfully dedicated more than 30 years to helping individual taxpayers, business owners, CPAs, Enrolled Agents, and tax attorneys navigate the complicated tax systems of the federal and state governments.
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 and 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.