California EDD Payroll Tax Problems
October 11, 2019

California EDD Payroll Tax Problems

Whether you have federal payroll tax problems or California payroll tax problems, one thing is for certain: the IRS does not mess around when it comes to collecting what they’re owed. Every day, business owners fail to pay payroll taxes for many reasons: insolvency, cash flow issues, fear, negligence, ignorance of the law, or simply procrastination.

If you think that paying vendors is more important that paying your payroll tax bill, think again. The IRS can impose massive penalties and interest on what you owe, and in some circumstances can even impose jail time. If you’re facing employment tax payroll problems, contact the elite, experienced California tax lawyers at Abajian Law for a no-obligation consultation about your rights and options.

California Employment Tax Problems Come In Many Forms

To be fair, running a business and correctly managing complex tax obligations can be challenging. Often, business owners who wind up facing EDD audit penalties or other serious tax problems as a result of their improperly managed payroll never meant to end up in this position. Whether they ran afoul of the California AB5 law limiting the use of independent contractors (the “20 factor test” determines this), or they simply underwithheld or were late on required payments, the result is the same: the IRS wants to be made whole.

A common story is that of a struggling business, the owner doing everything they can to keep persistent vendors and bills at bay, while relying on the fact that the IRS may not move as swiftly as some of the other creditors circling the waters. In reality, this is a terrible strategy: while you’re burying your head in the sand like an ostrich, hoping that by the time you speak with the IRS you’ll be ready to pay, your penalties are piling up one after the other. Ultimately, this number can balloon out of control and sink even cash-flush businesses. But fear not: a qualified EDD audit lawyer can help you untangle the web you’re in to achieve perfectly compliant freedom from your payroll woes.

What To Do If You’re Facing A California Payroll Tax Audit

The California Employment Development Department (EDD) can and will investigate businesses that fail to make their tax deposits on time (or at all). Often, business owners’ first inkling that something is wrong is when they receive word of an audit, or somehow become aware that their employee in charge of payroll was not following the law and making the proper deposits and withholdings.

The veteran EDD audit attorneys at Abajian Law can help protect business owners who have run into payroll tax problems as the result of a negligent or criminally-intentioned employee. In fact, the IRS does provide several avenues of tax relief for business owners in this position, including some that can shield you from personal liability for the mismanagement of your business’ finances.

In these and all similar cases, it’s critical to contact one of the payroll tax attorneys at Abajian Law, who can give you a knowledgeable rundown of your options. Some potential action items for individuals facing California EDD payroll tax issues include:

  • Having an Offer in Compromise accepted to negotiate down the outstanding payroll tax owed
  • Achieving time extensions and deferrals of penalties to allow your attorney to get your obligations in order
  • Agreeing to an installment plan that can split your owed payroll tax into more manageable chunks
  • Double-check the veracity of the IRS’ calculation of your owed payroll tax to ensure you only pay your smallest legal obligation
  • Lien and levy negotiation/removal
  • Getting the IRS to declare certain payroll tax debts as uncollectible
  • Appealing the IRS to receive penalty abatement

Although many of the above items can be potentially realistic options to help alleviate your situation, this is not a circumstance where you should be choosing your next steps alone. The IRS is an incredibly powerful, virtually unstoppable creditor who will be tireless in their quest to collect what they’re owed. You need a highly experienced, assertive attorney in your corner who can protect your interests and proactively find ways to work with the IRS that minimize the disruption to your life and finances. Abajian Law’s attorneys can do just that.

You might be thinking, “my business is a LLC/Corporation… I’m protected from personal liability.” This is a common misconception that does not apply as a blanket in all cases. Nor can you rely on bankruptcy laws to bail you out — payroll taxes will be collected from the IRS, even if they need to go directly into your pocket… or even those of your employees in some instances.

Ever heard of the trust fund recovery penalty? Also known as Code 6672, this is a way for the IRS to come after your personal assets to make good on a payroll tax debt, and only a qualified attorney can shield you from this action by proving you aren’t liable for the trust fund penalty. At Abajian Law, we’re well aware of your rights and options in these circumstances, up to and including suing the IRS to ensure that you get your day in the United States District Court.

Simply put, trying to handle EDD payroll tax problems on your own — even good faith actions like making as many payments as you can — is often the wrong move. The law as it concerns payroll taxes can be quite complex, and only your payroll tax attorney can advise you on the absolute optimal course of action for your unique situation.

Don’t put your head down and assume that your payroll tax issues will go away. They won’t, and the penalties are climbing every minute you put off this extremely important obligation. Pick up the phone and call the experienced, highly capable attorneys at Abajian Law to give you peace of mind from your payroll tax situation… before it’s too late.