California Payroll Tax – Employment Development Department

EDD Payroll Tax Representation

The Employment Development Department is the largest tax agency in California.

Although it handles a variety of functions (the Employment Development Department has roughly ten thousand employees and an annual budget of roughly twelve million dollars), one of its primary functions is the administration and collections of payroll tax for the approximately seventeen million workers in California.

As with the IRS, failure by employers to make payroll tax deposits is perceived to be a huge problem for California and, as a result, the Employment Development Department can take far-reaching and severe actions against businesses that do not meet their obligations.

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Employment Development Department Tactics

Employment Development Department collections officers employ a number of tactics in order to usher business taxpayers into compliance with the state.

  • The EDD can levy bank accounts, redirect incoming accounts receivables, file liens, and will seize assets in order to satisfy your outstanding liability.
  • Employment Development Department collections officers often are based locally (the EDD has more than four hundred offices in California) and can easily initiate collections investigations locally. These involve contacting customers, vendors, and other third parties directly along with showing up at your business unannounced.
  • The Employment Development Department has also been known to partner with other state agencies and initiate joint compliance checks, which can lead to heavy fines and assessments for businesses.
  • The Employment Development Department is known for and frequently conducts independent contractor audits to check California businesses for employee misclassification issues. As with the IRS, liability associated with these independent contractor audits increases substantially as it is multiplied by worker misclassified and by year.
  • Experience in practice has taught me that the Employment Development Department tends to cast a wide net when issuing preliminary assessments against businesses, often including years or periods where the workers were not even employed with the company.
  • Although several of them are very nice people, Employment Development Department auditors have a well-deserved reputation for being tough and no-nonsense when it comes to independent contractor audits. Failure to take them seriously can result in significant liabilities that can cripple or drive a business into insolvency.

Get EDD Help from Brotman Law

Although we are generally advocates of self-help when it comes to tax problems, Employment Development Department matters are largely the exception to this rule. Taxpayers who are not familiar with tax collection policies and procedures may unwittingly expose themselves to liability or may get themselves into a difficult situation. Employment Development Department financial statements and forms can be difficult to fill out and contain a number of pitfalls.

Our office would highly recommend that you contact us or speak with an experienced tax attorney before going forward with resolving your matter with the Employment Development Department.

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