What Every Business Owner Needs to Know When They are Working with an EDD Agent
*The following article was updated in July 2022*
“I am working with an EDD agent, how was my bank account levied?”
This is a very common question taxpayers have when they reach out for advice. California state employees are overworked and most of the time underpaid. EDD audits start when the EDD sends a letter that seems very vague and inconspicuous. When you receive an IRS audit letter, they are generally very clear that you are under audit for these tax years and this is what you need to do. Unfortunately, most of the time the EDD audit notices are opened by an Administrative person and are just put in a pile for someone to review. The EDD notices do not have a sense of urgency or strike the fear of God as most IRS notices do.
If that EDD audit notice sits in a pile and no one responds to it. The EDD has been known to make a determination based upon the type of industry, the historical payroll of the company, or the number of 1099s issued. The EDD will then send out a proposed assessment. If the company does not respond to that notice, contest it or provide additional documentation by the deadline, then the balance due will be sent to the collections department.
I have had some very sophisticated clients, in-house counsel or business owners immediately react to the EDD notice. They try to go back to the Assessment side and try to have an agent adjust the audit results. However, they didn’t realize that the left-hand doesn’t talk to the right hand at the EDD. The agent on the assessment side may be working with you, while the collection side is still trying to collect the balance due.
Most taxing agencies, whether it is IRS, EDD, CDTFA, or the FTB, have two different sides: the assessment side and the collection side. The Assessment side deals with how you get a bill: you file a return and self-assess yourself or a tax return is audited which results in a tax liability. The Collection side is just concerned with the payment of the balance due. They do not care how or why you have assessed this liability. They just want to collect payment for the amount that is owed to them.
Contact us, Experienced EDD Representation
Therefore, when you receive an EDD notice it is very important to take it seriously and make sure you contact the EDD within the time-frame allotted. If the EDD has sent you a notice, you should hire a professional to help. We, at Allison Soares, Attorney at Law, have years of experience working with the EDD to obtain a quick resolution. Please call our highly experience EDD legal practitioner or contact us here for a free consultation.