The California Employment Development Department (EDD) offers a wide variety of services to millions of Californians under the Job Service, Unemployment Insurance, Disability Insurance, Workforce Investment, and Labor Market Information programs. As California's largest tax collection agency, EDD also handles the audit and collection of payroll taxes and maintains employment records for more than 17 million California workers.
If you have a tax liability it is always best to pay in full. If you are unable to pay in full, you have many rights and options available to avoid enforced collections.
If immediate payment is not possible and you have an established history of timely reporting and payments with the EDD, and are not insolvent or bankrupt, you may qualify for an installment agreement.
If the liability due is less than $25,000 for an active business or $10,000 for an inactive business, a short-term installment agreement may be an option. The maximum term is one year. If you are unable to negotiate a short-term agreement or if the liability is over $25,000 for an active business or $10,000 for an inactive business, the EDD will consider a long-term installment agreement. The request must be written and include the following:
Once an agreement is reached, the plan will remain in effect for the period negotiated unless you:
In some situations when there is a genuine inability to pay back the full amount, the EDD will accept an amount less than the full amount owed. The guidelines are as follows:
The applicant's business must be inactive and no longer operating. Under these circumstances, you may apply for an Offer in Compromise.
If the business is still operating and active, you may apply for an Offer in Compromise only if you no longer have a controlling interest or any association with the business that incurred the liability.
The EDD is authorized to file with the office of the Secretary of State and record with any county recorder, a Notice of State Tax Lien specifying the amount of tax, interest, and penalties and costs due.
The recording of a Notice of State Tax Lien must take place within 10 years of the date the lien arose. The recorded lien is valid for 10 years and may be extended in 10 year increments. An EDD tax lien is enforceable for all obligations which exist against the owner of the property.Return to top
Interest is charged on all delinquent taxes, including Unemployment Insurance, Employment Training Tax, State Disability Insurance, and Personal Income Tax withholdings.
The interest rate is established pursuant to Section 19521 of the California Revenue and Taxation Code. The interest rate is adjusted semiannually based on the short-term federal rates in January and July of each year.
Interest is compounded daily on:
Interest is required as there is no provision in the California Unemployment Insurance Code to waive or cancel interest.
Use the daily interest factors in the table below to calculate the interest due on delinquent amounts.Return to top
You may have a qualified professional represent you. This requires that you have a power of attorney form completed and signed before any tax matter can be discussed with your representative. The state of California accepts the BOE-392 Power of Attorney for this purpose.Return to top
Below are links to information on California's other two taxing authorities:
We strive to save our clients money, time and stress. Just as there are many different tax related problems, there are many options for tax resolution. Call us at 888-902-0778 for a free consultation. In a few minutes we will help you to better assess what options are best for your unique situation.