The California Employment Development Department (EDD) How Is It Organized and What Does It Do?
Organization of the EDD
The Employment Development Department (EDD) is the third largest taxing agency in the State of California. The EDD employs over 10,000 people at over 400 service points throughout California. The EDD was created in 1935 for the purpose of having the state pick up on the federal unemployment insurance program. In 1946, a mandatory disability insurance program was added. This program is financed through a tax on the worker.
The EDD’s Employment Tax Branch has the responsibility of administering the collection, accounting and enforcement functions of California’s four basic employment taxes: the unemployment insurance (UI) tax, the employment training tax (ETT), the disability insurance (DI) tax, and the personal income tax (PIT) withholding programs.
The Employment Tax Branch is organized into two divisions: (1) field operations, including audits and collections, are conducted in 31 employment tax district offices located throughout the state, and (2) tax return processing, tax accounting and benefit accounting activities are centralized in Sacramento, as are all support functions and some audit, appeal and collection activities.
EDD Fraud Division
Compared to the IRS’s Criminal Investigation Division, the EDD’s Fraud Division is relatively small, yet effective. The Division is involved in aggravated cases of misclassification of workers as independent contractors. The Fraud Division is also responsible for prosecuting members of the underground economy.
EDD Field Offices
There are currently 31 EDD field or district offices. They are under the jurisdiction of three regional offices throughout California. A local field office is headed by a District Tax Administrator. The three Regional Administrators report to the Chief of the Field Audit Compliance Division. This is also a chain of command you can follow if you have a field complaint with any specific EDD district office.
A typical EDD district or field office is composed of three groups, supervisors and a manager to oversee it all. The three groups consist of one collection and compliance group, one audit group, and a support staff group. The collection group is further organized into two sub-groups: the benefit overpayment collection unit and the tax collection unit. A typical district has about nine employees in the collection group, ten in the audit group and six in the support staff group.
EDD Problem Resolution Office
The Employment Tax Problem Resolution Office was established in 1991. It is dedicated to helping taxpayers resolve problems with the EDD that cannot be resolved at the working level or through the normal chain of command. There is an in-house ombudsman for taxpayers and taxpayer concerns. This office has the authority to temporarily suspend action by branch staff when it appears that the EDD may be in error and the proposed action will do significant or irreparable harm to the taxpayer. The address and telephone number is:
Employment Tax Problem Resolution Officer
Tax Branch, MIC 93
Employment Development Department
P. O. Box 826880
Sacramento, CA 94280-0001
EDD Employers’ Bill of Rights (EBR)
The EDD does have a legislated Employers’ Bill of Rights (EBR). The following are the key features of the EDD’s version of EBR:
1. Probably the most important feature of EBR is the creation of the EDD’s version of the taxpayer ombudsman, the Problem Resolution Office, discussed above.
2. When a taxpayer disagrees with an action taken by the EDD, the EDD welcomes a discussion on the issues and where possible, appeals are available to the California Unemployment Insurance Appeals Board (CUIAB). This is an independent review board not controlled by the EDD. Actions that may be appealed to the CUIAB are:
a. A reclassification of workers as employees instead of independent contractors.
b. Denial of a request to transfer an employer’s Unemployment Insurance (UI) reserve account.
c. Denial of a protest to an unfavorable adjustment to an employer’s UI contribution rate or other factors used to compute it.
d. Denial of a claim for a credit or refund.
e. Appealing an obstructed claim for an alleged employee who complains that he or she has been denied unemployment benefits.
3. The taxpayer’s rights during the tax audit include:
a. The right to an impartial audit and a full explanation of EDD audit findings.
b. The right to representation during an examination.
c. The right to a copy of the audit file.
4. EBR provides for various safeguards and due process during the collection phase.