ASK THE EDD ATTORNEY – WHEN WORKING WITH AN EDD COLLECTOR CAN BE DANGEROUS
By Robert S. Schriebman
December 2, 2015
If you receive a Notice of Assessment (NA) from the EDD you must timely file a written petition with the CUIAB or with any EDD field office. (I do not advise sending your petition to the EDD office that conducted the audit as they may not forward it to the CUIAB.) There is no such thing as a valid oral protest. In the unfortunate case discussed in this article, you will learn the dangers of simply telling the EDD that you disagree with its assessment.
In this article I will discuss a real-world case in which a taxpayer received a very common type of NA and thought he had protested the assessment through conversations with an EDD collector.
Ralph received a final NA in August 2015. Ralph is a general contractor. The EDD issued the usual assessments for UI, DI, ETT, and PIT for a total basic assessment of $20,000. However, there were penalties for the failure to properly issue 1099s and W2s. These are known as Worker Information Return Penalties issued pursuant to CUIC §§ 13052 and 13052.5. These penalties, together with interest, totaled an additional $27,000! The EDD is entitled to collect these penalties as soon as they are assessed. All other assessments can be petitioned to the CUIAB without having to pay them first.
About a week after the final NA was issued Ralph received a Statement of Account from the EDD and a call from an EDD collector demanding full payment of the Worker Information Return Penalties. Ralph and the collector exchanged several calls in which Ralph verbally protested the assessment in rather strong language. The collector just listened and sympathized with Ralph. The collector sent Ralph an EDD Financial Statement for him to complete and submit together with 6 months of bank statements.
Ralph believed that he had “filed” a timely petition by verbally protesting to the EDD collector. He didn’t.
In mid-November Ralph received another call from his friendly EDD collector demanding full payment of the entire assessment because Ralph failed to timely file a written petition to the CUIAB. At his point in time the EDD collector wanted it all.
What Does An EDD Collector Do?
An EDD collector is a bill collector, pure and simple. EDD collectors like IRS collectors love money. An EDD collector cannot process a petition to the CUIAB. The collector can do several things:
- Establish an installment payment agreement.
- Suspend collection due to financial hardship.
- Entertain an Offer in Compromise.
Of course an EDD collector can garnish wages and levy your bank account. A collector can also put a “keeper” on site in your business to collect money as it comes in.
If a written petition has not been filed or was not timely filed a collector may be able to fully collect every dime owed to the EDD.
I have discussed the powers and functions of EDD collectors in articles posted on this website and I refer you to these articles for more information.
Only A Written Petition Counts
If you are on the receiving end of an NA you have to focus on one thing: timely filing a written petition with the CUIAB. There is no such thing as a registered verbal protest expressing your disagreements with the NA. You have 30 days from the date of the NA to file your petition. Your petition can be filed through the mail, Federal Express, or UPS. You may also FAX your petition to the CUIAB. When you file your petition also attach a copy of the NA.
Ralph is in a bad spot. He waited too long to get competent advice. A verbal disagreement with an EDD employee does not count regardless of whether you speak to an EDD collector or to the EDD auditor who handled your examination. Put your disagreements in writing and timely send them to the CUIAB with proof that you timely filed your disagreements in the form of a petition. There is no “form” for a petition. I have seen valid petitions that were no longer than one paragraph in length. The important thing is to let the CUIAB know that you disagree with the EDD assessment and you want a hearing. Don’t be like Ralph.
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.
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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