THE EDD’s AUDIT RECONSIDERATION PROCESS – YOUR SECRET WEAPON
Did you ever wish you had a magic wand to reduce or possibly even eliminate your EDD assessment? Suppose you failed to timely respond to an EDD Notice of Assessment and now you have a collector calling you for payment. Is there a way to keep that collector at bay while the EDD reopens your audit?
The EDD has a process known as “Audit Reconsideration.” It is all about due process – receiving a notice and a right to be heard. You may have moved and the EDD either did not have your last known address or negligently sent a Notice of Assessment to an old address. These things happen.
The audit reconsideration process allows the EDD to take a second look at your audit or any type of deficiency. Perhaps you have found new evidence to offer to win your argument that your workers were in fact independent contractors and not employees. You may have hired an accountant to prove that your payroll tax returns should be lower than the EDD’s estimate. The Audit Reconsideration puts a brake on the collection process and allows the EDD to take a fresh look at your case. If you can prove your matter, you may be able to reduce or even eliminate a big EDD bill.
The EDD does not have a formal audit reconsideration program as do the IRS and the FTB. If a taxpayer did not receive a Notice of Assessment prior to demand for payment, or that Notice was inadequate or perhaps sent to a wrong address, the taxpayer should file an appeal with the CUIAB claiming a lack of notice and a lock of due process. The CUIAB will take the issue under consideration, and the EDD will take no collection action until a decision is rendered by the CUIAB.
If, however, the CUIAB denies the appeal, the only recourse is to pay the liability and file a claim for refund.
The key provisions to assessment abatements are CUIC 1131, 1132, and 1206. These are the basic provisions that discuss the due process issues involved in issuing a formal Notice of Assessment. CUIC 1131 merely states that an employer shall be given a written Notice of Assessment pursuant to CUIC 1206. CUIC 1132 discusses the service of that Notice and the basic three-year statute of limitations for assessment. Hearings are considered “jurisdictional” and can be requested at any time during the assessment and collection processes (North Bay Roofing and Gutter Systems, Inc. Case No C-7-683160, 2003).
How do you get an audit reconsideration? You have to ask for it. It will not be volunteered to you. Most EDD personnel are unaware of this process.
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.