ASK THE CALIFORNIA EMPLOYMENT TAX AND PAYROLL TAX ATTORNEY – ALL ABOUT THE EDD’S “STATEMENT OF ACCOUNT”
By Robert S. Schriebman
If you owe the EDD, and even if you may not owe the EDD, you may be on the receiving end of a Statement of Account (SA). This is a multi-column accounting of what the EDD has recorded on its books as being a potentially collectible deficiency. There are 6 columns on a typical SA: Period Ending, Tax, Penalty, Interest, Credit, and Remaining Balance. A typical SA is shown in Exhibit A. This article will discuss why the EDD issues an SA, the accuracy of the SA, and what you should do when you receive the SA.
Why Did You Receive an EDD Statement of Account?
The EDD will issue a Statement of Account (SA) if it has a “receivable” on its books. Most SAs are issued as a result of an EDD audit. Most EDD audits result in assessments. If the employer receives a Notice of Assessment (NA) but fails to timely file a petition with the CUIAB, the assessment becomes final and subject to collection. The EDD will issue an SA to inform the employer of the amount currently due and owing.
Even when a timely petition is filed, the EDD may issue an SA. This causes quite a bit of confusion. Employers who know they have timely filed with the CUIAB will still be on the receiving end of an SA, even if they are not required to pay.
If an employer owes the EDD because quarterly returns were filed but not paid in full or were filed late, and incurred late penalties, an SA will be issued demanding payment.
The most important thing to look for if you are on the receiving end of an SA, is the box at the bottom of the form showing “Amount Due.” If you look at Exhibit A, attached, you will see that there are zeros in the amount due box. This tells the employer that a timely petition has been filed but no payment is required. This can be a very confusing situation!
What Should You Do If You Receive a Statement of Account?
The first thing you should do is to review the SA for accuracy especially the column heading “Period Ending.” Make sure that the EDD is correct. If you timely filed a petition with the CUIAB but there shows an amount due, you should contact the EDD and inform them that you have a timely filed petition and are not legally required to pay anything until your case is resolved. You should also make sure that you have been given credit for all payments. If there are zeros in the Amount Due box, you need take no action.
The Statement of Account can be a very confusing thing. My experience has shown that the numbers stated on the form are rarely accurate. The real problem comes when you can prove that the quarterly returns filed with the EDD were timely filed and fully paid, or a timely petition has been filed with the CUIAB yet the SA shows an amount due. The EDD, like any taxing agency, makes mistakes. It is important to be proactive. If there are errors on the SA you should contact the EDD promptly or seek the advice of an experienced professional.
Robert Schriebman has a successful practice in the Rolling Hills Estates area of Los Angeles County serving clients throughout California and the United States. He has successfully dedicated more than 50 years to helping individual taxpayers, business owners, CPAs, Enrolled Agents, and tax attorneys navigate the complicated tax systems of the federal and state governments. Mr. Schriebman is in private practice. He is not affiliated in any way with the EDD and he is not employed by the EDD or any other agency of the State of California.
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.
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.
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.
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