ASK THE EDD LAWYER – EDD AUDITS – DON’T TAKE AN EDD ASSESSMENT LYING DOWN
By Robert S. Schriebman
A perspective client called recently. She had several questions about her company’s pending EDD audit. We also discussed briefly her post-audit options. That’s when she told me that other lawyers she interviewed told her to just pay the amount of the assessment and walk away. My response was a total disagreement with their advice. After the call ended I became both disturbed and concerned that there were actually lawyers out there telling people to effectively lie down and take whatever the EDD dishes out.
In this article I want to tell you that you should rarely if ever simply concede an EDD assessment. The overwhelming numbers of EDD audits can and should be challenged. Irresponsible or lazy EDD auditors should be taken to task. You do have options. About the only time you should just pay an audit assessment is if the amount involved is substantially smaller than the cost of representation and the risk of the IRS coming into the picture is very small.
Most EDD Audits Should Be Challenged
Most EDD auditors are responsible and take pride in their work. This does not mean that they are necessarily on the side of the taxpayer-employer; EDD auditors are not your friends. They are there to make money for the State Treasury. This however cannot be done and should not be done at the taxpayer’s expense. Yes, there are employers who attempt to evade the law. One example of this occurs in the construction industry where licensed general contractors knowingly hire unlicensed subcontractors. Another example is the employer who pays workers partially in cash and partially by check with the goal of filing false W2s, 1099s and quarterly IRS and EDD payroll tax returns. The EDD is hard on these employers as they should be.
Auditors are human and they make mistakes. If you believe mistakes have been made in your audit, you have both the right and the duty to bring this to the auditor’s attention. If you do not get the results that you feel you are entitled to receive, you have the right to go up the “chain of command.” Ask for a meeting with the auditor’s supervisor. In government, everyone has a boss.
Assuming that your efforts to convince the auditor did not go well for you, don’t give up the ship. You have options. Your options depend upon the timely filing of a petition after you receive the Notice of Assessment. Once you timely file your petition you may still contact the auditor’s boss or bosses to convince them of your position. You may also attempt to settle your audit or you may elect to have a judge hearing before the CUIAB. Many cases are settled on the courthouse steps.
In my opinion telling anyone under EDD audit to simply pay the assessment and walk away is professionally irresponsible. The EDD is always willing to reconsider an audit if you have proof that the auditor was wrong or misunderstood what you said. Settlement options and judicial hearings are also available. It is my advice and recommendation that you see a professional and get a second or even third opinion from anyone telling you to just give up the ship. Don’t take an EDD assessment lying down.
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.
Web Site Article 319