Appealing an EDD Audit
If the EDD issues an audit assessment, you will receive information about your appeal rights. Taxpayers often ask their tax attorney, how can I appeal an EDD audit? You may draft a petition for reassessment with an independent third party, the California Unemployment Insurance Appeals Board, for a hearing before an Administrative Law Judge. Correspondingly, you have 30 days from the date on the Notice of Assessment. Also, the Notice of Assessment will outline the taxes owed, any worker’s compensation insurance liability, and any penalties. A significant penalty is the PIT penalty, or the personal income tax penalty. See our EDD audit penalties article for a more detailed discussion of EDD audit penalties. Afterwards, the EDD will process the appeal and will file an answer to your petition. Read this answer carefully as it will provide some insight into the EDD’s position and any procedural issues that you may need to be aware of, such as an untimely petition for reassessment.
EDD Appeals Process
The petition for reassessment will be heard by the California Unemployment Insurance Appeals Board (CUIAB). The CUIAB is a separate and independent review board apart from the EDD that renders decisions on tax and benefit matters related to the California Unemployment Insurance Code (CUIC). The CUIAB is supposed to be impartial, and the judges are administrative law judges. The time and place of the hearing are determined by the local CUIAB Office of Appeals, and often one or two years can go by before your appeal is heard before the CUIAB. At least 20 days before the date of hearing, the CUIAB will send to you written notice of the time, date, place, and issues to be covered in the hearing. During the hearing, you and the EDD will have the right to call and examine witnesses, to question opposing parties and witnesses, and to introduce exhibits; therefore, you should thoroughly prepare and bring to the hearing all evidence (witnesses and documents) that you believe will help prove your case.
How Can I Prepare?
While your appeal is waiting to be heard, there can be interest charges. You do have the option to submit a deposit to the EDD in the amount of the tax liability to stay interest charges. In addition, you will need to consider how to treat any workers that were re-characterized while the appeal is waiting. Moreover, if the EDD determined them to be W-2 employees, you may want to enter the settlement program before having a board hearing. The EDD routinely will audit years subsequent to the years that were audited to see if the taxpayer has changed the employment status of the workers that were reassessed.
What if I Disagree with the CUIAB?
After the ALJ has reviewed, heard, and rendered a decision on your case, you have 30 days from the date of the ALJ’s decision to file an appeal with the CUIAB Appeals Board. The CUIAB Appeals Board, however, will review only the transcript of the ALJ hearing and evidence. Neither you nor the EDD will be present during the Board’s review, and additional evidence cannot be submitted.
If the CUIAB Appeals Board denies your petition, you still have an avenue to appeal. You will have to pay the liability in full, and then you may file a claim for refund with the EDD. You can file a second petition with the Chief ALJ if your claim for refund is denied. You can again file an appeal with the CUIAB Appeals Board if you still don’t agree with the ALJ’s decision. Once you have exhausted all of these administrative remedies and are still dissatisfied with the decision, you may appeal your case to the Superior Court.
How Can I Appeal and EDD Audit? Contact an EDD Attorney
If you have received a notice of assessment and would like to discuss your options, please contact an EDD tax attorney at Disparte Tax Law for a free consultation. We will discuss your options and can inform you of your rights.