You’ve gone through the process of an EDD audit and now you owe EDD Money to the state of California due to and EDD overpayment? Like many San Francisco business owners and taxpayers, you may be wondering how to pay those penalties. The EDD works through the Central Collections Division to notify you as to how much you owe and how to pay EDD debt.
[cta-form title=”If you owe money to the EDD, it can feel overwhelming, but there are steps you can take to resolve it. You can set up payment plans, use online options, or explore other ways to manage what you owe. A lawyer can help you understand your options and make the process smoother.” button_label=”GET HELP HERE” link=”/contact/”][/cta-form]If you owe money to the EDD and haven’t repaid it, they can take your state or federal tax refund to cover the overpayment. This process is called a tax offset under California Government Code Section 12419.5. To avoid having your EDD refund claimed, pay the full amount before the offset occurs.
Generally, the EDD has 20 years to collect money from a taxpayer. This is often surprising to California taxpayers and San Francisco business owners because the Internal Revenue Service (IRS) generally has only ten years to collect a tax debt.
EDD Payment Options Available to Settle Your Audit Penalty
- Paying your tax liabilities in full
- Paying your tax liabilities in installments
- Using an Offer of Compromise to settle EDD overpayment debts
- Asking for a hardship suspension option, which leads to the suspension of collection for a duration of time because you are unable to pay off the debt
Even if you do not have the funds to pay the entire tax liability in full, it is crucial that you seek at least one of these options for payment. If you do not at least attempt to pay the EDD what you owe, you may not be able to negotiate a favorable repayment plan. An experienced tax attorney can help you decide on your best option and obtain a payment plan with the EDD.
If you do not opt for one of the four repayment options, the EDD can garnish your wages in order to pay taxes owed. When this happens, the EDD will send a “wage garnishment order” to your company or employer. The company must deduct a certain percentage (typically 25% of net income) as part of the EDD wage levy from your monthly income that will serve as payment for your debts.
In addition to wage garnishments, the EDD can also use the following means:
- Initiate an EDD levy to take money from your bank account
- Stop payment of unemployment and disability wages
- Levy (or take) state and federal income tax refunds
- Limiting lottery winnings
- File a lien against you
The last thing you want to do is to be forced into one of these extreme options. Your best path is to hire a professional San Francisco tax attorney with experience in dealing with EDD collections and EDD audits. This lawyer can make sure you have the best tax repayment plan established.
Failing to repay overpayments on time can result in deductions from future unemployment, disability, or PFL benefits. Additional actions include withholding federal and state tax refunds or state lottery winnings.
How Much Does EDD Pay in California?
The Employment Development Department (EDD) of California calculates your weekly benefit amount based on the highest-earning quarter of your base period. Generally, your benefit is determined by dividing your total wages from that quarter by 26. The weekly benefit amount can range from a minimum of $40 to a maximum of $450 per week, depending on your earnings. You can use the EDD’s online calculator to estimate your specific benefit.
Allison Soares is a partner and tax attorney at Vanst Law. It doesn’t matter the issue: audits, collections, appeals, international disclosures, grumpy people— Allison enjoys fixing problems. In addition to her legal work, she has worked in accounting and utilizes that knowledge to her advantage while handling cases involving EDD audits.
