California Employment Development Department Information
The EDD handles payroll taxes and employment records, as well as a wide range of services. This includes 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 California workers.
Inability to Pay
Paying in full is always the best option when it comes to resolving a tax liability. However, if you are unable to do so, there are means available to you that avoid enforced collection actions.
If you cannot pay your initial tax debt in full and have a good history with the EDD, you may be able to arrange a short-term installment agreement. You will need to comply with any terms and conditions given to you, lest you incur penalties or an enforced collection process.
A long-term agreement may be considered if you cannot meet the requirements for a short-term one. This may require more documentation, comprehensive financial information, and an increased number of other conditions.
The EDD may record a lien against a delinquent taxpayer. A tax lien is a public notice of debt that specifies the amount of tax and any associated fees such as penalties or interest. Liens enable further enforced collection actions and are lifted only when the associated liability is resolved.
Priority One: Stopping Aggressive Enforced Collections
Offer in Compromise
If you are unable to pay your tax liability in full, you may qualify for an Offer in Compromise, allowing you to settle it for less than the full amount. To do so, your business must be inactive and no longer operating. If your business is still active and operating, you must no longer maintain controlling interest or association with the business that incurred the original liability. Additional conditions include:
- You cannot be reasonably expected to pay in full or over time
- You must not have means or assets that could satisfy the liability
- The amount negotiated must be more than could be collected within a given timeframe
- The liability is undisputed and final
- You are not able to pay the accumulating interest and 6.7% of the remaining liability annually
All delinquent taxes are subject to interest. Current EDD rates and more information can be found here: https://www.edd.ca.gov/payroll_taxes/interest_rate.htm
Power of Attorney
You may authorize a qualified professional to represent you before the state. You must complete and submit the appropriate documentation to do so prior to any discussion of tax matters. These can be found here: https://www.edd.ca.gov/payroll_taxes/forms_and_publications.htm