It is important to note that according to Unemployment Insurance Code (“UIC”) Section 1735, an officer, owner or any person in charge of affairs of any corporation, LLC or LLP, is personally liable for the amount of the contributions, withholdings, penalties, and interest unpaid by business entity, if business entity willfully fails to pay the amount. Assessments become delinquent if not paid before they become final, and subject to a penalty of 10%. UIC Section 1135. Sections 1222 and 1224 provide that assessments become final (and delinquent) after 30 days from an assessment date, or if taxpayer petitions or appeals assessment, within 30 days of an Administrative Law Judge or Appeals Board decision date. Therefore, filing an appeal generally extends time to pay tax.
Employment tax assessment imposed by EDD under UIC is appealed before Administrative Law Judge. Employer-taxpayer needs to file a petition for review or reassessment within 30 days of service of a notice of assessment or denial of claim for refund. This period can be extended for another 30 days by administrative law judge if good cause is shown by taxpayer-employer. UIC Section 1222 states that assessment or denial of claim for refund will be final if taxpayer fails to file appeal within allowed period. The appeal must be in writing and can be mailed, shipped, fedexed, electronically transmitted by email or brought in person to the applicable office of the appeals board or even to EDD branch office.
Notices are served by EDD in person or by mail. The time for filing a petition (30 days) is extended five days if the petitioner is within the state (35 days), 10 days if outside the state but within the country (40 days), and 20 days if outside the country (60 days). UIC Section 1206. Notice is effective at the time of mailing by EDD or at the time of delivery to employer-taxpayer.
In appeal petition employer who appeals must put name of the petitioner (person or business entity), employer EDD account number, the mailing address of the employer. It is not required, but petition also may include telephone number, email of the employer, EDD case number, statement of reasons for appeal, any request for language assistance (Spanish, for example), and the signature of employer who appeals assessment of denial of tax refund.
Prior to hearing before administrative law judge taxpayer can and probably should request a copy of all documents in the audit file. EDD will charge small amount for copying file. Then taxpayer can review EDD’s answer to his or her petition. After that taxpayer may find it helpful to figure under which category he or she falls (corporate officer, agent, salesman, homeworker, unlicensed worker, artist or author). Taxpayer may find it helpful to review EDD publications pertaining to taxpayer’s particular industry, or talk to an attorney about that. Attorney would review relevant precedential cases applicable to this case. It is important to determine taxpayer’s status to figure out what laws and regulations apply to person or business entity, which, in its turn, will help to figure out proper arguments to present on appeal. After that penalty issues can be addressed as well as statute of limitations (time period within which appeal is allowed).