EDD Collections in California
When it comes to paying off a tax liability, the EDD has two plans. The first one is a payment plan and the second is an Offer in Compromise (OIC). The payment plan depends on your current ability to cover your tax liability. The EDD agent is focused on the taxpayer’s financial status at the moment, and how quickly the liability can be collected.
As a result of the heavy workload of EDD agents, the collection of tax liability for taxpayers who respond late to an assessment or audit notice is sometimes carried out immediately. So it is vital that you collaborate with your Collections Agent to avoid levies and involuntary collections. In addition, you must continue to file all returns on time, make your current tax payments electronically, and respond to all requests in a timely manner.
There have been some situations where a taxpayer does not provide a timely response to an EDD notice. This allows the state agency to collect from the client automatically. When the assessment is done, the Collections department receives it, the proper notice is given, and then the EDD takes immediate collection actions. In short, if a taxpayer doesn’t respond to a notice, their bank accounts can be levied.
Experienced San Diego and 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 owners who receive this notice follow the instructions and respond quickly to the notice. The EDD will go through all means necessary to ensure that the 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 reduce your ability to pay off the debt
It is vital for you to at least try 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.
If you haven’t already, it is highly advisable to consult with a skilled San Diego or Orange County EDD Collections lawyer to help you navigate the legal process with no repercussions. Call Allison Soares today for professional legal advice. Allison Soares has the skill and experience to help business owners navigate all aspects of tax law and business law in California, including:
- EDD audits, appeals, and collections
- IRS tax matters and audits
- CDTFA audits
- FTB audits
- Business law (business advisory services)
- Business formation
- Corporate law
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 the 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 debtor’s lottery winnings
- Take the matter to court and ensure that a line is ordered on the debtor’s 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. The 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 an experienced Orange County EDD Collections attorney, who 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. Your lawyer may also play a major role in reviewing facts about your debts and determine whether the EDD followed due process or if the sidestepped 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 Statute 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 contains 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.
Call Our EDD Collections Attorney in San Diego and Orange County
If you find yourself in this situation, seek the help of an Orange County or San Diego EDD Collections attorney. Be sure to do this immediately if you receive a letter or call from the EDD in regard to payment of old debts that are no longer your responsibility. Your 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, be 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 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 San Diego EDD Collections lawyer is well-versed in California tax law and 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.