California State Payroll Taxes Employment Development Department

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If you are in business and want to stay in business and you have unpaid state payroll taxes in California, you should call us without delay. Time is of the essence to keep your business open and the future of your company safe and sound. Without action, the Tax Branch of the Employment Development Department will lock your doors and go after your finances and personal assets.

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In addition, the Collection Officers of the Tax Branch could classify your business as being part of the underground economy and go after you for criminal tax fraud. Since the Tax Resolution Institute is based in Southern California with locations in Los Angeles, Orange County, and San Diego, we know how to handle unpaid payroll taxes in California with the EDD and bring your business back into proper compliance with California state law. Please do not delay and contact us today!

The Employment Development Department (EDD) in California is part of the Labor and Workforce Development Agency of the executive branch of the state. As California’s largest tax collection agency, the EDD handles the audit and collection of payroll taxes for companies located and operating in the state. If you owe back payroll taxes to the Employment Development Department, they will come after you with a determined focus. Even more than the IRS, the EDD considers the withholding of payroll taxes to be a case of tax fraud, and they will consider criminal prosecution. Beyond having to pay the fees and penalties, you could end up with a criminal case as well.

The California Employment Development Department recognizes that employers are vital to the economy. Although they realize that with the difficulties in the California economy, employers are working harder than ever to meet their obligations, they will not make exceptions to the law. You and every California employer are responsible for paying state payroll taxes on time. Employers are required to report all employee wages to EDD each calendar quarter and periodic deposits of State Disability Insurance (SDI) and Personal Income Tax (PIT) withholdings are required. The employer’s determines the frequency of the deposit schedule and the amount of PIT withheld.

The rules governing California payroll tax problems are similar to IRS rules, but there are also many important differences. The Employment Development Department’s Tax Branch administers the collection, accounting, and auditing functions of California’s payroll tax program. The program consists of Unemployment Insurance and Employment Training Tax, which are employer contributions, and Disability Insurance and Personal Income Tax, which are withheld from employees’ wages. If you fail to report these withholdings and pay them on time, the Tax Branch will come after your business.

The Tax Branch, one of the largest tax collection agencies in the nation, handles all enforcement functions for the Employment Development Department. Each year, the California Employment Development Department collects more than $31 billion in payroll taxes and maintains records for more than 17 million workers.

Since the EDD offers a variety of payroll seminars and workshops to help you meet your payroll tax obligations, they will enforce collection actions with impunity against you if your business has unpaid state payroll taxes. In addition, on account of the number of illegal workers in California and the damage done by the underground economy, they will prosecute you for fraud without asking questions first.

The Employment Development Department has a major ongoing issue with what they describe as the “underground economy”. Underground economy is a term that refers to businesses that deal in cash to conceal the amount of taxes that they owe from government licensing, regulatory, and taxing agencies. Underground economy is also referred to as tax evasion, tax fraud, cash pay, tax gap, payments under-the-table, and off the books.

It is estimated the size of the underground economy is anywhere from 3 to 40 percent of the above ground economy. Based on this estimate, the California underground economy totals up to over a $100 billion. Now that is a lot of lost revenue, particularly in trying economic times. With California in serious financial crisis, the underground economy does damage by state tax income.

As a result of the lost revenue, the Employment Development Department has been told by the executive branch to go after tax offenders in the underground economy with a renewed vigor. Even if your business is legal and above ground, if you withhold your business fails to cover its payroll taxes, the state collections officers will consider you part of the underground economy.

When businesses operate in the underground economy, they illegally reduce the amount of money expensed for insurance, payroll taxes, licenses, employee benefits, safety equipment, and safety conditions. Illegal employers gain an unfair competitive advantage over businesses that comply with the law. The resulting unfair competition in the marketplace forces law-abiding companies to pay more taxes to compensate.

Even if you company is above ground, if you fail to pay your payroll taxes on time, the Tax Branch may suspect you of being part of the underground economy. If you are behind on your payroll taxes, contact Peter Stephan and the Tax Experts at the Tax Resolution Institute. Our experienced CPAs and Tax Attorneys have extensive experience working with the California Employment Development Department.

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We can’t help until you contact us. Click here to fill out our simple
Tax Resolution form

With our learned expertise, we can help save your business by putting you in compliance and helping to remove the Tax Branch’s suspicion of the involvement of your business in the underground economy. Avoid the lasting damage of tax fraud and contact us today to keep the future of your business viable and secure.