Advice on 13 year old Debt with CA EDD - The Bills.com Blog

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Advice on 13 year old Debt with CA EDD

Question: I owned a business 17 years ago. Employment development dept is now contacting me about a debt they claim is from 1991 and 1992. They state that I owe $4,000 for EDD debt. Isn't there a statue of limitation on this? I live in California. Please advise?

Answer: While regular commercial and consumer debts generally have a four year statute of limitations in the Stateof California, debts owed to government agencies, such as the IRS, the Franchise Tax Board, or, in your case, the Employment Development Department, can be collected for much longer periods of time. For example, federal taxes owed to the Internal Revenue Service generally have a statute of limitations of ten years. However, California law provides no statute of limitations for the collection of unpaid state tax obligations, meaning that the state can try to collect such debts indefinitely. First, you may want to contact the EDD to determine why they claim that you owe them money. Once you have determined the source of the obligation, the best piece of advice I can offer you is to consult with a qualified commercial tax attorney to discuss your situation and what steps you can take to mitigate the potential costs associated with this debt. To read more about the California Employment Development Department’s policies relating to payroll taxes, I encourage you to visit

the EDD’s website at http://wwwedd.cahwnet.gov/Payroll_Taxes/.

If you and your attorney determine that this debt is a valid and collectable obligation, you may need to work out a plan to pay the EDD to prevent further collection activity against you. If you contact the EDD, they may be willing to negotiate a repayment arrangement with you. You may even be able to settle the debt for significantly less than is actually owed if you can prove to the EDD that you do not have sufficient assets to fully repay the obligation. You should consult with your attorney to discuss your financial circumstances and to determine the best option available to resolve this debt.

If your business was a corporation or a limited liability company (LLC), you may not be personally liable for the tax obligations of the business. Generally speaking, the officers of a corporation or LLC are not personally liable for

the debts of the business, including many tax obligations. However, if you withheld payroll taxes from your employees’ paychecks and then failed to turn the money over to the government tax authorities, you may be help personally liable for the debt based on your failure to execute your duty as the party responsible for the payment of your employees’ payroll taxes. Again, I strongly encourage you to consult with an attorney specializing in business tax law to discuss the details of your situation, to determine your liability, and if liable, to decide the best way to repay this obligation.

Regardless of the source of the debt, is important that you address this matter in a timely manner to prevent the EDD from taking further action against you. I wish you the best of luck in resolving this situation, and hope that the information I have provided helps you Find. Learn. Save.

Best,
Bill
www.bills.com/blog/

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