The Employment Development Division
(“EDD”) is the largest California
tax collection agency, collects more than 31 billion in
payroll tax annually, and maintains employment records
for more than 17 million
California
workers. The EDD takes collections actions very
seriously and is aggressive against small business
owners who fall behind on their payroll taxes. The EDD
can levy business bank accounts, contact customers
directly to demand payment, and/or file a tax lien
against your business which becomes a matter of public
record and can negatively impact your operations.
Most EDD matters
remain civil controversies, although recently the EDD
has stepped up their enforcement against fraud.
Anti-fraud activities within the EDD include employer
audits, fiscal monitoring, and analyzing client,
employer, and medical provider demographic data; and
conducting criminal investigations that include
surveillance, undercover operations, computer forensic
analysis and data mining, search warrants, witness and
suspect interviews, evidence seizure, and arrest and
prosecution of suspects.
Many businesses
facing financial burdens and/or without the appropriate
internal quality controls may fail to file or deposit
all of their quarterly payroll taxes. In addition, many
disputes with the EDD arise over whether workers are
classified as independent contractors or employees. If a
worker who is classified as an independent contractor
files for unemployment insurance, it may trigger a
payroll tax audit. Filing bankruptcy or having the
limited liability protection of a corporation will not
protect you. Through a Trust Fund Recovery Penalty, the
EDD can take steps to hold you personally liable for
your company’s non-payment of payroll taxes. Your
personal assets can be seized and are at risk, including
your home.
Dealing with the EDD can be
complicated and requires a through knowledge of EDD
internal procedures and California
employment tax laws. Our experienced attorneys have a
strong track record of success and are properly equipped
to handle all of your EDD disputes including:
