Experienced Orange County EDD Collections Lawyer
The EDD notifies individuals about their debts through a letter from a tax representative who represents their Central Collection Division. This notice, which may also come in the form of a phone call, contains information about the amounts incurred, the repayment date, and the tax representative assigned for the debt collection. It is important that business owner who receives this notice follow the instructions and respond quickly to the notice. The EDD will go through all means necessary to ensure that collection of the debt is met.
You have a few different options for paying your EDD collection assessment:
- Paying all your tax liabilities in full
- Paying your tax liabilities in installments
- Using the Offer of Compromise to pay off debts
- Employing the hardship suspension option, which leads to the suspension of collection for a duration of time due to limiting conditions that reduces your ability to pay off the debt
It is vital for you to at least try to one of the options. Failure to respond to the notice will lead the EDD to attempt one of the collection methods that may not be best suited for you and may reduce your ability to successfully negotiate a better plan for payment of your debt.
EDD Wage Garnishment
If you have unpaid income taxes, student loan debts, child support debts, overpaid state unemployment or disability benefits, the EDD will utilize its power to garnish your wages and pay back your debt. The process involves a wage garnishment order sent by the EDD to your employer or company. This order holds specific instructions that the employer must follow to ensure proper wage garnishment. The order specifically compels the employer to deduct a certain percentage from your monthly income that will serve as payment for your debts.
Even though the deduction is carried out, the remaining percentage during any wage garnishment is enough to satisfy your daily living expenses. California law states that wage garnishment of any kind does not exceed the 25% net income of a debtor. This amount refers to income after deduction is being carried out or the amount of your net income after deductions exceeds 40 times the state’s minimum wage ($11 per hour in 2018), whichever is less. For the average wage earner, 25% of net income is the usual amount garnished.
Wage garnishment is not the only option available for the EDD to satisfy debt. They can also employ these methods:
- Stop payment of unemployment and disability wages
- With the collaboration of the FTB and IRS, stop state and federal income tax refunds
- Limiting all or some of the debtors lottery winnings
- Take the matter to court and ensure a lien is ordered on debtors property
What to Do if the EDD Takes Your Money
When it comes to debt collection, the EDD makes it their number one priority. So any contact from the EDD through its tax representatives should be taken seriously. Collection of your tax debt is being carried out by the EDD and not by a jury or judge. Your best path is to hire a professional with experience in dealing with EDD collections and EDD audits. An experienced tax attorney will reach out to the tax representative assigned to your case and carry out a thorough investigation to help determine or validate the debt being charged to you. The experienced lawyer may also play a major role in reviewing facts about your debts and determine whether the EDD followed due process or if the side stepped some procedure when making the debt assessment. They can do a thorough check as to the duration of the statute of limitations on the debt if there is any.
What is the Statue of Limitations on EDD Tax Collection?
This is a commonly asked question by California residents and it has a surprising answer. In some cases, the EDD has 20 years to collect from a taxpayer. This is alarming because the IRS has only a 1- year collection limitation.
The Franchise Tax Board (FTB) also has a statute of limitations of 20 years for taxes being owed to them.. If your tax liabilities have been incurred for several years, you run the risk of debt collection through methods that are harmful such as a bank account levy, wage garnishment, or a court order to seize all assets and property.
The EDD is allowed to take numerous collection actions such as levies within the first three years of a final EDD liability. If the specified period elapses the EDD takes note of a Notice of Lien, which then enables them to use enforced collection. This lien is only in effect for 10 years, until it elapses another record. At that time, an Extension of State Tax Lien is recorded which also gives the EDD an additional 10 years to use enforced collection.
The EDD being aware of the lack of limitations on their tax debt collection has started setting some trends that are extreme. This includes the act of collection targeting businesses that are defunct or not operational without being dissolved legally. This act tries to collect liabilities that are old and incurred by individuals whose companies are no longer functioning. The EDD can also assess an owner, officer or employee of the company personally. Once the assessment is made, the EDD can go after the individual for the business tax debt.
Recognizing their short duration to assess and hold leaders of corporations liable, the EDD has resorted to sending collection letters to owners and shareholders of defunct companies and corporations. This letter contain orders demanding that these ancient corporate taxes be paid even though they have not been properly assessed. This has led to a rise in repeated disturbances from EDD tax representatives demanding that the debt be cleared as soon as possible. These individuals are currently being called by EDD collectors demanding payment.
If you find yourself in this situation, seek help of an Orange County EDD Collections attorney. Be sure to do this immediately if you receive a letter or call from the EDD in regards to payment of old debts that are no longer your responsibility. The tax lawyer will be in a better position to address these issues.
You can fight the EDD collection if the debt is old. Proof of irregularities in the assessment is a perfect way to stop EDD collection. The assessment can also be challenged if there were irregularities during the assessment, no matter how much time has passed since the assessment or collection. Also being informed about the provisions in the California Unemployment Insurance Code (CUIC) will go a long way to prove whether the assessments sent by the EDD was sent to the right address and failure by them to do that could potentially invalidate the assessment. Penalty abatements can be substantial to in the challenge of EDD collection. An Offer in Compromise (OIC) has been an effective medium in pushing back these collections. If it is determined you do not have the resources to repay the ancient debt, eligibility for OIC would be granted in order for the matter to be fully resolved.
Even though the EDD has varieties of collection tools at their disposal, it doesn’t make them immune to mistakes. Our experienced Orange County EDD Collections attorney well-versed in California tax law will guide you in the repayment process and help assure a positive outcome. Call us to discuss your case. We offer representation in both Orange County and San Diego County.