ASK THE EDD LAWYER- WHAT ARE THE INSTALLMENT PAYMENT ARRANGEMENTS CURRENTLY OFFERED BY THE EDD FOR THE PAYMENT OF DELINQUENT PAYROLL TAX DEFICIENCIES? PART II
by Robert S. Schriebman
This is Part II of a two part series discussing the latest developments in negotiated EDD installment payment agreements.
If you or your business owes the EDD delinquent withholding and employment taxes you may be able to take advantage of one of three “in place” installment payment programs currently being offered through the EDD Collection Division. These agreements are usually set up through an assigned EDD Collector. The first agreement is referred to as a “Short-Term Agreement – Up to 12 Months.” The second agreement is referred to as a “Long-Term Agreement-Greater than 12 months – up to 36 months.” The third agreement is referred to as a “Non-Standard Installment Agreement.”
Regardless of the type of agreement that is right for you, your assigned collector will review your past EDD history to determine if you have previously defaulted on any prior installment agreement. If you are an in-business taxpayer during the term of the agreement, you must keep current on your EDD payroll tax compliance. This means you must file your quarterly and annual returns on time and timely pay what is owed on each return.
This article will discuss the long term agreement and the non-standard installment agreement as well as the documentation and information required to establish each type of agreement.
Long-Term Agreement-Greater than 12 Months – Up to 36 Months
If you owe the EDD more than $25,000 and you need more than 12 months to pay, you may get as long as 36 months or even more time depending on your circumstances. A long term agreement is usually reserved for out of business or inactive taxpayers.
The taxpayer must include a good faith payment and submit a written request that includes:
- An explanation of how the liability was established
- What action has been taken to resolve the liability
- How the taxpayer plans to keep current on future financial obligations to EDD
(applies only to active accounts)
- The proposed repayment terms
- Financial information on business and personal assets (not non-assessed corporate officers) with supporting documentation
– The Financial Statement (for individuals) (DE 926B) and Financial Statement for Businesses (DE926C) are available, but any recent financial statement containing the same data is acceptable.
Non-Standard Installment Agreement
If you are unable to pay the balance within the time and monetary limits for a long term agreement, you may also be eligible for a non-standard agreement. The non-standard agreement refers to the fact that your agreement does not fall neatly into either the short term or long term agreement criteria. The same documentation stated above for a long term agreement is also necessary if the non-standard agreement is due to either of the following:
- The balance of liability is greater than the short term agreement threshold
- The time frame for repayment exceeds the long term agreement threshold
Interest Continues to Accrue
An installment payment agreement is similar to a bank loan in that the EDD will charge you accruing interest on your unpaid balance. You may find that at the end of your payment term, you still owe the EDD accruing interest. In my practice I find that many clients are taken by surprise when they learn that they have to pay interest on their outstanding balance.
My special thanks to EDD collector Joann Kristol for supplying me with her insights and information on these types of agreements.
©Robert Schriebman 2013.
An EDD attorney, Robert Schriebman has a successful practice in the Rolling Hills Estates area of Los Angles County serving clients throughout California and the United States. As a trusted EDD lawyer, Robert 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 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.