What Happens After I File My EDD Petition – Part One
By Robert S. Schriebman
This is Part One of a two part article discussing your options after you file your EDD petition.
You have been audited by the EDD and received a Notice of Assessment. Once receiving the EDD Notice of Assessment, you have only 30 days to timely file your petition with the California Unemployment Insurance Appeals Board (CUIAB). Assuming your petition has been filed timely, what are your next steps and what can you expect from the EDD?
Shortly after you file your CUIAB petition, you will receive a document entitled Notification of Petition Received. If you do not receive this Notification within two weeks after filing your petition, you should call the CUIAB Clerk’s Office to make certain your petition has been timely received. You can contact the Clerk at 916-263-6733. By the way, you may also file your petition via fax to the Clerk at 916-263-6763. Either way you have the duty to make certain your petition has been timely filed and received by the CUIAB.
Once you receive the Notification that your petition was timely filed, your next step is to contact the assigned EDD auditor and request a copy of your entire audit file. Your file will include an Audit Report with supporting documentation showing how the EDD arrived at the numbers on your Notice of Assessment. You are absolutely entitled to these internal EDD records. However, you should send your request for files by either certified mail return receipt requested, or a private carrier, such as UPS or Federal Express. It is important to have written evidence that your document request has been received. If you do not receive your files after 30 days from the date of your request, you should call your assigned auditor or his or her manager to inquire as to when you can expect to receive your files. You will need these records in the event you wish to undertake settlement negotiations or have a formal hearing before an Administrative Law Judge (ALJ).
After the CUIAB receives your petition, it will be referred back to the EDD so that an Answer to your petition can be prepared and filed in your matter. You will eventually receive a copy of the Answer. Read it very carefully because it sets forth the EDD’s position in your case. It may also explain why various penalties have been included in the Notice of Assessment. No response to the Answer is required on your part. After the Answer has been received by the CUIAB it will calendar your case for an ALJ hearing. There is quite a backlog of cases and not enough ALJ’s to go around. It may take over one year from the time you file your petition to the time you receive your Notice of Hearing.
You should know that filing a petition does not suspend the accrual of interest set forth in your Notice of Assessment. Interest continues to accrue and is compounded daily. It can add up fast. Therefore, you should consider paying as much of the assessment as you can while the matter is pending. The more you pay, the less interest accrues – just like a bank loan.
What happens to your petition if you decide to pay your entire assessment in order to avoid accruing interest? Some people mistakenly believe that if they pay the assessment in full, they will no longer have a dispute to bring before an ALJ. This is not the case. Section 1179.5(a) of the California Unemployment Insurance Code provides that full payment made before an ALJ issues a decision on a petition will automatically constitute the filing of a claim for refund that is deemed denied. This means that the petition will automatically become a petition to review a denial of the claim for refund by the Director of the EDD. The same rules apply if you are appealing an adverse ALJ decision. This is a very important rule in the petitioner’s favor. Some petitioners may want to have a Superior Court Judge hear their case. However, the Superior Court has no jurisdiction over an EDD audit unless and until the taxpayer exhausts all administrative remedies. By converting a regular audit administrative process into a refund administrative process, the law “short circuits” this lengthy and cumbersome procedure and streamlines it so the petitioner can have his or her day in court.
In Part Two, we will discuss your resolution options after you have filed your EDD petition. You have essentially three options: (1) Withdrawing your petition; (2) EDD settlement negotiations; or (3) A formal hearing before an ALJ and appeal.
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.