Taylor Nelson Amitrano LLP, a tax controversy firm in Irvine, CA, announces a legislative amendment to California Unemployment Insurance Code Section 1755, effective January 1, 2024, extending the time financial institutions must hold levied funds, protecting taxpayers’ rights. The amendment, proposed by Rami M. Khoury and co-authors, allows taxpayers ten business days to dispute levies with the Employment Development Department before funds are remitted, a significant win for California taxpayers.
IRVINE, Calif., Feb. 13, 2024 /PRNewswire-PRWeb/ — Taylor Nelson Amitrano LLP, a prominent tax controversy firm located in Irvine, CA is pleased to announce that the California legislature enacted an amendment to California Unemployment Insurance Code (“CUIC”) Section 1755 to protect the rights of taxpayers on October 13, 2023, based on a proposal co-authored by Rami M. Khoury and other members of the firm.
The enacted legislation, which became effective January 1, 2024, requires financial institutions to hold funds for at least ten business days after receiving a levy (called a “withholding order” under California law) before sending levied funds to the Employment Development Department (“EDD”). The enacted legislation also extended the deadline by which financial institutions are required to send levied-upon funds to the EDD.
Under the prior law, financial institutions were required to remit the levied funds to the EDD “within five days of the service of the levy” to avoid a risk of being held liable to the EDD for the amount withheld. The five calendar days time period included weekends and holidays, which increasingly limited the amount of time afforded for a taxpayer to dispute the levy. Thus, financial institutions were incentivized to immediately send funds to the EDD after receiving a levy from the EDD, at the expense of the rights of their customer, the taxpayer.
Following an EDD levy on their financial account, a taxpayer should be afforded the opportunity to persuade the EDD to release funds subject to levy before those funds are sent to the EDD. For example, the taxpayer could challenge the procedural validity of the levy, could claim that the funds in the account are exempt from levy, or could claim that failure to release levied upon funds would create undue financial hardship for the taxpayer. Given the short amount of time previously afforded under the prior law, the taxpayer would often be deprived of any opportunity whatsoever to persuade the EDD to release the levied-upon funds based on hardship, a claim of exemption from levy, or the failure of the EDD to follow proper procedures.
The amendments to CUIC 1755 in California Assembly Bill No. 1389 (AB-1389) dated February 17, 2023, resulted in a big win for California taxpayers. The amendments protect basic taxpayer rights, while also giving financial institutions the flexibility that they need to avoid impinging on the basic rights of their customers. Because these amendments require financial institutions to hold levied-upon funds for a minimum of ten business days (but no more than 14 business days) before levied funds are sent to the EDD by the financial institution, taxpayers are now able use this 10-business day period to talk to the EDD about the levy and seek administrative relief from the levy before any funds are sent to the EDD. Unlike under the prior law, taxpayers now have an opportunity to be heard and are provided a sufficient amount of time to dispute an EDD levy and avoid extreme financial hardship.
About Taylor Nelson Amitrano
The amendments track a proposal made by Rami M. Khoury and other personnel at Taylor Nelson Amitrano LLP as members of the 2019 Sacramento Delegation, which is a delegation of the California Lawyers Association Taxation Section, which proposes changes to California tax laws each year.
Taylor Nelson Amitrano LLP is a highly regarded tax controversy law firm dedicated exclusively to resolving complex tax disputes. Led by A. Lavar Taylor, a seasoned attorney with experience in tax law and litigation, the firm provides comprehensive legal representation to clients nationwide and internationally. Visit their website at https://www.taylorlaw.com/ or call 714-546-0445 to learn more.
Media Contact
Maggie Allen-Reimers, Taylor Nelson Amitrano LLP, 714-546-0445, [email protected], https://www.taylorlaw.com/
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