ASK THE EDD LAWYER- When the EDD Tries To Collect An Ancient Deficiency, How Do You Determine If The Records Still Exist?
by Robert S. Schriebman
You have recently been contacted by an EDD collector for a very old deficiency. For example, the EDD is asking you to pay an alleged deficiency for the years 1992, 1993, and 1994. If this was a creditor, in the ordinary course of business, the chances would be that the debt was long barred by the statute of limitations for collection. Not so with the EDD. They basically have a 30-year time frame to collect what they believe is owed to them. However, the chances are that the EDD collector contacting you is getting his or her information off of a computer screen and does not have your original file. Is it fair after all this time that you have to write a check or enter into a payment arrangement with the EDD based upon merely computer generated information? I do not think so.
What avenues are available to you for challenging the EDD collector’s right to demand money from you? Here are a few suggestions:
- Ask the collector if he or she has your original files
The first thing you should do is to ask for basic contact information from EDD collector. Get a name, email address, mailing address, telephone and fax numbers. If any of this information is refused, ask to speak with the collector’s supervisor or manager – and get that person’s contact information, too.
After obtaining contact information from the EDD collector ask if the collector has your original files. The chances are the answer will be negative. However, you should request a copy of the data on the computer screen as well as a copy of a transcript of your account. The transcript may have information as to how and when the ancient liability was determined and calculated.
Assuming that the collector on the other end of the phone does not have your original files, your next step is to contact the EDD Taxpayer Advocate’s Office that can be found on the EDD web site.
- Working with the EDD Taxpayer Advocate
Over the years I have found that the EDD Taxpayer Advocate’s office is very responsive and helpful in handling unusual problems and providing information and documentation promptly. If they do not have the documentation or information at their finger tips they will find out who does and put that person in contact with you.
I suggest you contact the Advocate in writing instead of explaining your situation over the phone. You can fax the EDD Advocate at 916.654.6969.
After explaining to the EDD Advocate that you are being contacted for the payment of an alleged ancient deficiency you should explain that you do not believe that you owe the EDD any more money. If you have the documentation to prove this, provide it, but provide copies only. Some people save government records forever, and you may be able to prove that you have paid the liability. Recently a client contacted me involving a 1991 and 1992 EDD bill. They were able to provide copies of documents proving the liability was paid in full. They had refinanced their home in 1998. The EDD had previously filed a Notice of Tax Lien for 1991 and 1992, but the escrow documents showed the EDD paid in full. The EDD had issued a Release of Lien that was recorded in Los Angeles County.
If you do not have proof of payment, or you believe the EDD claim to be bogus, ask the EDD Taxpayer Advocate to provide you with your files. You can make this request pursuant to the State of California Public Records Act.
- What documents should you ask the Advocate to send you?
If the EDD collector tells you that the computer says you owe money because you filed returns and did not pay in full, or you filed late thus generating delinquency penalties, ask the EDD Advocate to produce copies of the employment tax returns subject to the alleged deficiency.
If you were audited ask for a copy of your entire audit file. You should also ask for copies of any audit statute of limitations extensions you may have granted to the EDD during the course of the audit.
If you were audited, and the audit resulted in an assessment, you should ask for copies of any Notices of Assessment. You should also request copies of any assessment notices that were returned by the Post Office as undeliverable as addressed. Even at this late date you may be able to file a petition to challenge the assessment as being in violation of your due process rights. If you win the due process challenge it will now be too late for the EDD to attempt to reassess you. The EDD must now throw out that old assessment.
- What should you do if your files have been lost or destroyed by the EDD?
It is not uncommon for any government taxing agency to destroy taxpayer records over the course of time. Ancient records may have been copied on microfilm, but even that may have been destroyed. I believe that any taxing agency, whether it be the IRS, FTB, or EDD, must maintain original records of unpaid tax liabilities because taxpayers have rights to file claims for refund when deficiencies have been paid in full. If these records have been prematurely destroyed you should not have to pay what the EDD says you owe. Let the EDD prove they have a valid and legal claim against you. You may wind up having to pay the debt after all, but you can turn around and file a claim for refund based on the destruction of your records.
An EDD attorney, 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 lawyer, 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 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