The Tax Branch (TB) of the Employment Development Department (EDD) administers the collection, accounting, and auditing functions of California’s payroll tax program. If a business owes an EDD Tax Liability, the EDD statute of limitations for collection is important to analyze. Moreover, the program consists of Unemployment Insurance and Employment Training Tax, which are employer contributions, and State Disability Insurance and Personal Income Tax, which are withheld from employees’ wages. Each year, the EDD collects more than $76.5 billion dollars in payroll taxes and processes more than 51.6 million employer tax documents and remittances. Additionally, the UI, ETT, and SDI tax collections are used to support programs administered by the EDD.
The EDD Tax Branch consists of four divisions: EDD Field Audit and Compliance Division, Collection Division, Tax Processing and Accounting Division, and Tax Support Division.
EDD Tax Audits
The California Unemployment Insurance Code (CUIC) and the Government Code authorize the EDD to conduct employment tax audits and investigations of businesses operating in California. Payroll tax audits and investigations help provide education outreach to employers regarding their state employment tax
obligations and ensure that workers are covered for social benefits that the EDD provides. If you have received a letter from the EDD initiating an EDD tax audit, begin to prepare for the EDD audit.
EDD Collection Division
Collection Division (CD), a division within Tax Branch, is responsible for administering the employment tax and benefit overpayment collection programs. The employment tax programs are designed to encourage voluntary compliance by employers, claimants, and their representatives. Involuntary collection action may be necessary to reach the goal of full compliance.
The principal mission of CD is to maximize EDD accounts receivable collections and promote voluntary compliance. A taxpayer may use a CD program for qualifying employers if the taxpayer cannot pay the full liability. Programs include EDD offers in compromise and EDD installment programs. CD may use statutory involuntary collection action to collect contributions from employers and responsible persons. CD secures delinquent tax returns to ensure timely and prompt resolution of claims for benefits and collects liabilities that taxpayers owe to the EDD.
The EDD also can issue withholding orders and bank levies and liens. If you have a tax liability, it is important to discuss your options with an EDD tax attorney to determine your best course of action to avoid levies and withholding orders.
EDD Statute of Limitations for Collections
The EDD statute of limitations for collections. Under the provisions of Section 7172(c) of the GC, to prevent a recorded or filed Notice of State Tax Lien from expiring and to remain within the statute of limitations, the EDD must file a Notice of Extension of State Tax Lien with the county recorder or filed with the SOS within 10 years from the recording or filing date. The 10-year period may be crucial.
California Constitution Article 13, Section 30, provides that every tax shall be conclusively presumed to have been paid after 30 years from the time it became a lien unless the property subject to the lien has been sold in the manner provided by the Legislature for the payment of the tax.
California Constitution Article 13, Section 30 states: “Every tax shall be conclusively presumed to have been paid after 30 years from the time it became a lien unless the property subject to the lien has been sold in the manner provided by the Legislature for the payment of the tax.”
With respect to the EDD personal assessment statute of collections, the statute of limitations is generally three years from the last day of the month following the close of the quarter. In accordance with the provisions of section 1132 of the CUIC, the statute of limitations for section 1735 of the CUIC assessments run from the last day of the month following the close of the calendar quarter in which liability accrues against the responsible person or within three years after a deficient return is filed, whichever is later. Moreover, liability accrues against the responsible person on any delinquency date that the responsible person willfully failed to pay contributions or withholdings.
If you have received an EDD audit letter, or have an EDD tax liability, contact Disparte Tax Law today.