Tax Help with the California Employment Development Department, also known at the EDD:

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.

Below you will find information unique to the EDD.

Inability to Pay: Installment Agreements
Inability to Pay: Offer In Compromise
Liens
Interest
Power of Attorney

Inability to Pay in Full

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 you can afford to make payments on a back tax liability, an Installment Agreement may be an option.

Installment Agreements

Requesting an Installment Agreement 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, contact your assigned representative to negotiate an installment agreement.

Short-Term 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 can generally be negotiated. The liability must be satisfied as quickly as possible. The maximum term is one year. Long-Term Installment Agreement 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 Department will consider a long-term installment agreement. The request must be written and include the following:

How the delinquent liability was established and what action has been taken to resolve the liability. Also submit your proposed payment schedule and describe how you will keep current on future financial obligations to EDD.
A good faith payment.
All Annual Reconciliation Statement(s) (DE 7), Quarterly Wage and Withholding Report(s) (DE 6), and Payroll Tax Deposit(s) (DE 88) that have not been filed/paid through the current quarter.
Financial information on business as well as personal assets: Financial Statement for Individuals (DE 926B) and Financial Statement for Businesses (DE 926C) or any recent financial statement which has substantially the same data is acceptable. Corporations and all corporate officers, individual business owners, partnerships, and each general partner are required to complete financial statements. Corporate officers should provide personal financial information as well as information involving the corporation.
Corporations, limited liability companies (LLC) and limited liability partnerships (LLP) will be required to complete a Corporate Information Questionnaire (DE 204). The form establishes the responsible persons of the corporation, LLC or LLP. Responsible persons who willfully fail to pay contributions, withholdings, penalties, and interest on the date they become delinquent may be held personally liable.

Defaulting an Installment Agreement

Once an agreement is reached, the plan will remain in effect for the period negotiated unless you:

Fail to make payments as agreed. This includes nonpayment, late payment, paying less than agreed, or checks returned by your bank unpaid.
Incur additional liability after the agreement is negotiated. Additional liability usually arises because you do not pay current taxes. This condition would not apply if the additional liability results from a non-fraudulent assessment covering a prior period.
Fail to file all required reports and/or DE 88s on a timely basis without good cause.
Fail to submit timely Interim Contribution Return(s) (DE 2858) with payment when specifically required as a condition of the agreement.
Are found to have intentionally provided false, materially inaccurate or incomplete information. This does not apply to simple mistakes.

Offer In Compromise in California

In some situations when there is a genuine inability to pay back the full amount, the ED 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 whether you were an individual owner, partner, or an individual assessed under Section 1735 of the CUIC.

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.

Must not have prospects of increased income or assets which allow payment within a reasonable period.
Must not have assets which, if sold, would satisfy the liability.
The amount offered must be more than the Department could expect to collect through involuntary means within four years of the time the offer is made.
Compromises are prohibited for liabilities assessed for fraud (Section 1128) or where the employer has been convicted of a violation of the CUIC.
Only non-disputed, final tax liabilities will be considered.
Must not have access to income sufficient to pay more than the accumulating interest and 6.7% of the outstanding liability annually.

Liens in California

The Employment Development Department (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 contributions, interest, and penalties and costs due the Department.

If any employer or other person fails to pay any amount due this Department at the time that it becomes due and payable, that amount (including penalty, interest and costs), shall be a perfected and enforceable tax lien.

Notice of a State Tax Lien

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. The Department’s lien is enforceable for all obligations which exist against the owner of the property.

Effects of a State Tax Lien

The Department’s tax lien is a perfected and enforceable State Tax Lien on all property and rights to property, whether real or personal, tangible or intangible, including all subsequent acquired property and rights to property belonging to the taxpayer.

Release of Lien

A Release of Lien is mailed to the County Recorder’s office and the Secretary of State within 40 days after the liability, including penalty and interest, has been paid in full. The Release of Lien is not mailed directly to the taxpayer. A copy of the Release of Lien may be obtained from the County Recorder’s office. A Status of Lien Release letter will be sent to the taxpayer if requested.

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Interest with the EDD

Interest Rate

Interest is charged on all delinquent taxes (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:

All unpaid tax.
Interest.
Certain penalties.

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.

Delinquency Date	Interest Rate	Daily Interest Factor
01/01/08 to 06/30/08	8%	0.000219
07/01/07 to 12/31/07	8%	0.000219
01/01/07 to 6/30/07	8%	0.000219
07/01/06 to 12/31/06	7%	0.000192
01/01/06 to 06/30/06	6%	0.000164
07/01/05 to 12/31/05	5%	0.000137
01/01/05 to 06/30/05	4%	0.000110
07/01/04 to 12/31/04	4%	0.000110
01/01/04 to 06/30/04	5%	0.000137
07/01/03 to 12/31/03	5%	0.000137

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Power of Attorney with California

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.

Below are links to California's other two taxing authorities:

Franchise Tax Board handles individual income and corporate taxes.

Board of Equalization handles property, sales and excise taxes.

If you have unanswered questions, do not hesitate to contact Larson Financial.