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  • Home
  • About
    • Ronson J. Shamoun, ESQ., LL.M.
    • Chandara Diep, ESQ., LL.M.
    • Joseph Cole, ESQ., LL.M.
    • Devon J. Arabo, ESQ., LL.M.
    • Lauren Suarez, ESQ., LL.M.
    • Daniel Huynh, Esq., LL.M.
    • Christopher Engelmann, ESQ., LL.M.
    • Leslie Miranda, Esq., LL.M.
    • Brian M. Malloy, Esq.
    • Steve S. Mattia, Esq.
    • Sam Imandoust, ESQ., LL.M
    • Kaveh Imandoust, JD, MBT, CPA
    • Andrea Cisneros Valdez, Esq., LL.M.
    • Martin Schainbaum, ESQ., LL.M.
    • Dod Ghassemkhani, ESQ.
    • Vincent Renda, Esq.
    • Pedro Bernal, Esq.
    • Melanie M. Shamoun
    • Sandie Portilla
    • Renae Arabo
    • Sabri P. Shamoun
    • Hilary Dargavell
    • Lupita C. Torres
    • Jewell Cornejo
    • Kesia Belford
    • Remy Hogan
    • Judith Jeremie
    • Marley Smith-Peters
    • Melanie Chan
    • Tanner DeMera
    • Charles Ecker
    • Anna Gurr
    • Asia Smith
  • Practices
    • ERTC – Call Us Before It’s Too Late!
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        • IRS Appeals
          • IRS Appeals Process
          • Contesting an IRS Levy
          • Why Retain RJS LAW for IRS Appeals
          • 4 Tips For Navigating The IRS Rapid Appeals Process
        • IRS AUDITS
          • IRS Correspondence Audits
          • What are IRS Field Audits?
          • Initial IRS Compliance Center Audits
          • IRS Office Audits
          • What happens in an IRS Audit?
          • Taxpayer Rights Under IRS Publication 1
          • IRS Warns Taxpayers About Scam
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          • Avisos en Español
        • IRS Collections
          • Avoiding and Eliminating IRS Tax Liens
          • Collection Due Process Hearing
          • CP 501 – IRS Notice
          • Failure to file a tax return: What happens?
          • How the IRS calculates interest
          • How to get a tax levy released
          • ACS – Automated Collection System
          • IRS Collections Process
          • IRS Interest Abatement
          • IRS Revenue Officers
          • Jeopardy Assessments and Jeopardy Levies
          • National Tax Agencies
          • RJS LAW Approach to Collections
          • IRS Statute of Limitations on Collections
          • Streamlined Installment Agreements
          • Tax Penalty Abatement
          • Taxpayer Assistance Orders
        • IRS Payroll Tax
          • Independent Contractor Reclassification Audits
          • IRS Forms 940 and 941
          • IRS Trust Fund Interviews
          • Payroll Tax Liability Payment Options
          • Trust Fund Recovery Penalties
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          • OVERVIEW OF OFFER IN COMPROMISE PROCESS
          • The Offer in Compromise Process
          • Appealing an Offer in Compromise
          • How does the IRS evaluate an Offer in Compromise
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          • Offer in Compromise Requirements
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          • Offer in Compromise Alternatives
          • Actual IRS Offer in Compromise Results
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        • California State Tax Matters – California Franchise Tax Board | FTB | EDD
          • California Residency Audits
          • Discharging State Income Taxes in Bankruptcy
          • State Tax Practice – Outside of California
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        • Criminal Investigation Division
        • IRS Criminal Investigation Division Tactics
        • Criminal Tax Defense – Tax Crimes
        • Currency Transaction Records & Suspicious Activity Reports
        • IRS Methods of Proof: Tax Fraud and Evasion
        • Methods IRS Agents Use to Locate Assets
        • IRS Special Agent Visits
        • Are You a Criminal Investigation Target?
        • Criminal Tax Attorney vs. White Collar Defense
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    • 8th Annual USD School of Law – RJS LAW Tax Controversy Institute – July 28th, 2023
    • 7th Annual USD School of Law – RJS LAW Tax Controversy Institute – July 15th 2022
    • 6th Annual USD School of Law – RJS LAW Tax Controversy Institute
    • 5th Annual USD School of Law – RJS LAW Tax Controversy Institute
    • 4th Annual USD School of Law – RJS LAW Tax Controversy Institute
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What is the California EDD Audit Statute of Limitations?

What is the California EDD Audit Statute of Limitations?
EDD Audit Advice California EDD Audit Statue of Limitations

If you have been contacted by the California Employment Development Department (EDD), you are not alone. Here is some EDD audit advice. The California EDD aggressively enforces employers’ payroll tax obligations, and falling behind even for a single quarter can lead to an invasive audit with the potential for severe financial penalties. What is the California EDD Audit Statue of Limitations?

But the California EDD does not always audit businesses right away. Furthermore, even if your audit was triggered by an isolated delay in payment, the California EDD may decide to audit several years’ worth of your company’s payroll tax records. For these reasons, if you have been informed that your company is being audited, it is important for you to be aware of your company’s rights under the California EDD’s audit statute of limitations.

Unemployment Insurance Code Section 1132: The California EDD Audit Statute of Limitations

The statute of limitations for California EDD audits appears in Section 1132 of the Unemployment Insurance Code. Under Section 1132:

“Except in the case of failure without good cause to file a return or report, fraud or intent to evade any provision of this division or authorized regulations, every notice of assessment shall be made within three years after the last day of the month following the close of the calendar quarter during which the contribution liability included in the assessment accrued or within three years after the deficient return or report is filed, or was due, whichever period expires the later. . . .

“In case of failure without good cause to file a return or report, every notice of assessment shall be made within eight years after the last day of the month following the close of the calendar quarter during which the contribution liability included in the assessment accrued.”

In other words, in most cases, the statute of limitations for California EDD audits is three years, although it may be extended to eight years in some cases. In cases involving “fraud or intent to evade” an employer’s payroll tax responsibilities, there is no statute of limitations at all.

The three-year statute of limitations runs from the later of (i) the end of the month following the close of the relevant quarter, or (ii) the date that a deficient return or report is filed or was due. Since the eight-year statute of limitations applies only to the failure to file a return or report, it runs solely from the end of the month following the close of the relevant quarter.

The California EDD Statute of Limitations Applies to the Delivery of a “Notice of Assessment”

If you read the quoted language above carefully, you may have noticed that the statute of limitations establishes a deadline for the delivery of, “every notice of assessment.” This is critical, because it means that the statute of limitations could expire while a California EDD audit is pending. These audits will often drag out over a period of several months; and, if the California EDD does not send a notice of assessment before the applicable statute of limitations expires, then the audit should be terminated immediately without any risk of liability (at least insofar as it covers the time-barred period).

However, as an employer, it is up to you to assert the statute of limitations under Section 1132. The California EDD frequently initiates audits for periods that are time-barred under the statute of limitations, and it will not automatically terminate an audit if the applicable statute of limitations expires. For more information, you can read: What to Expect from an EDD Audit.

Speak with a California Payroll Tax Lawyer for Free

If you have been contacted by the California EDD, our attorneys can help ensure that you pay no more than absolutely necessary. To discuss your California EDD audit in confidence, call 619-595-1655 for EDD audit advice or request a complimentary case evaluation online today.

Filed Under: EDD Audit Tagged With: ca edd, Statute of Limitations California

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