EDD Denies Benefits Corporate Officers Who Also Serve as Employees

[jvaski]

I have a problem ......EDD Appeals Board final ruling .
In this case their tax auditor determined that because I am the officer of my Calif S-Corp - I have always been employed with "corporate officer duties at my disgression"
Therefore , they have ruled that during the year I was paid benefits and seeking work - I was actually employed !
They will be certainly furnishing me a letter of determination of overpayment with penalties ( could be at more than $20,000 )
My option is file a Writ of Mandate with Superior Court .
I have not been successful in obtaining an experienced EDD attorney and cannot find a standardized Writ of Mandate form anywhere on line .

I invite anyone who has a similar case with EDD regarding their attack on corporate officers collecting benefits to please contact me. We need to file a class-action lawsuit !

[SOCA]

I have a problem ......EDD Appeals Board final ruling .
In this case their tax auditor determined that because I am the officer of my Calif S-Corp - I have always been employed with "corporate officer duties at my disgression"
Therefore , they have ruled that during the year I was paid benefits and seeking work - I was actually employed !
They will be certainly furnishing me a letter of determination of overpayment with penalties ( could be at more than $20,000 )
My option is file a Writ of Mandate with Superior Court .
I have not been successful in obtaining an experienced EDD attorney and cannot find a standardized Writ of Mandate form anywhere on line .

I invite anyone who has a similar case with EDD regarding their attack on corporate officers collecting benefits to please contact me. We need to file a class-action lawsuit !

An EDD supervisor told me that the tax auditor dept. is primarily responsible for making sure that the employer is paying it's fair share of unemployment tax ( per claimant ). And, that they will ask the U.I. recipient for wage stubs in an effort to determine this. Is this correct ? If not, what is the real function of the tax auditor dept ? In your case, are they pursuing you because you are being viewed as an employer ?

[jvaski]

An EDD supervisor told me that the tax auditor dept. is primarily responsible for making sure that the employer is paying it's fair share of unemployment tax ( per claimant ). And, that they will ask the U.I. recipient for wage stubs in an effort to determine this. Is this correct ? If not, what is the real function of the tax auditor dept ? In your case, are they pursuing you because you are being viewed as an employer ?

No, The EDD does not like - nor do they recognize the legally seperate entities of a corporate officer and employee of the s-corporation.
As employee of the corporation I am legally required to pay into unemployment benefits - but they're saying I cannot collect it !
They have in this case purposely misintreperted their own codes to create employment where there was none - to recover benefits they approved and paid for over a year !
I can only hope the judge in the superior courtroom is non-biased as a state employee..........

[jvaski]

Interesting development .
I sent multiple demands to EDD for copies of my phone interview records etc and finally got calls from two dept managers...
After lengthy conversation .......one of them suggested that I leave a "sleeping dog lay" and likely my case is lost in the system .......
I don't trust that their tax auditing dept ever really loses anything - they just get around to it much later when they please and can charge even more interest on repayment !
I'm not sure now what the hell to do .....or whether to pursue this in Superior court or not just yet

[Cachicambo]

First, may I suggest that you change your view on EDD's intentions. While you may certainly feel attacked, EDD and it's representatives gain nothing from, "attacking" you. Also, EDD doesn't like or dislike a single thing about corporate officers, the law governing the code is based upon Precedent Benefit Decisions. Going before any judge with a "they are out to get me" attitude is one of the worst things you can do for yourself. At worst you'll look paranoid and at best extremely misinformed.

There are a couple of issues with your scenario that are not clear. Are you the sole corporate officer/owner of the corporation? In what capacity do you perform services? Did you receive any compensation for your services as an officer? Do you chose if you pay yourself? Also, employee's in California are NOT required to pay into Unemployment benefits, it's funded by the employer, through their reserve account. While you were collecting UI were you still performing services in any capacity for the corporation, wether you were compensated or not? If so, for how many hours a week.

If you want to read up a bit on the law governing this issue, read this: http://www.edd.ca.gov/uibdg/Total_an...rate%20Officer

[jvaski]

Thanks , in answer to your reply .......
I am the sole officer of my Calif S-Corp. My home building construction business literally ended in early 2008 when the final new home I built was completed. Since then - there have been absolutely no duties as a "corporate officer" to be performed - other than looking for work - either as a construction company or individual. The trigger for the tax audit is the receipt of a "delayed payment" I received as employee shortly after I began collecting benefits ( late 2008 ). This "delayed payment" was for work completed much earlier in the year when I completed my final home - and I literally insisted a phone interview with EDD to explain this -and they approved my explaination and continued payments of benefits. My corporation has a history of these "delayed payments" when a property sells and the corporation has the money to pay me as employee. This "delayed payment" obviously sent up a red flag a year later with their Tax Auditing division. EDD departments admittedly do not communicate with each other and have their own ajendas.
Their tax auditor literally then "fabricated" employment status for me after our disgussion of this "delayed payment". In short - the Tax Auditor didn't like this "delayed payment" - decided that I had corporate duties when I had none, spread this "delayed payment" over the entire year - and then had the nerve to say - " obviously because you had wages over the entire year you've been employed " ( these are the wages he elected to spread out ) It was literally a "fabrication of employment status" !!
As employee of my Calif S-Corp - I AM required as anyone else to pay into unemployment benefits when I received payment as employee. Do I choose to pay myself ? NO, technically ...... the Corporation chooses to pay me as an Employee. This is a relationship which is legally and fully understood as two seperate entities in the tax law in the state of Calif.
So, what may look like complaining (" they're out to get me" ).......is a TRUE story - and if they pull this off - they can "frame" any corporate officer they want benefits repayment from !

BTW, thanks for the link to TPU 110 , I have already read this article backwards and forwards and there are two previous test cases that are somewhat parallel to my situation. In both cases the EDD lost the case because the corporate officer was simply unempllyed beyond his control and seeking work both as corporate officer and individual.
And the EDD tax auditor used their code to spread my wages over a year - but negelcted to read the part where the code literally states " wages spread over a period of employment" which was not the case .
This EDD Tax Auditing division is corrupt.....and backed-up all the way by a biased and arrogant Appeals Board !

[Mr. Knowitall]

So you're stating that you accepted a 'delayed payment' of income you earned, and both you and the corporation had paid taxes upon, prior to its (informally) going out of business?

[jvaski]

NO, the the taxes were paid upon receipt of the "delayed payment " as had always been done previously when a project sold and the corporation had money to pay the employee.

[Cachicambo]

Your situation is complicated to say the least, so let me make sure I understand. You didn't perform ANY services what so ever as either an employee nor as a corporate officer after filing your claim for benefits and all the monies that you received there after were for work which was done prior to filing your claim? So was the corporation dissolved? During this time when you performed no services as a corporate officer was the corp completely inactive? If you were spending full time hours seeking work and promoting the continuation of the corporation then you would be considered to be fully employed since although you are not receiving any wages you are working what would be considered full time. When you say the corporation choses to pay me as an employee that's the same thing as you choosing when and how you pay yourself if you are the sole officer of Calif S-Corp, if you alone control your employment and you alone are the corporation then you do chose how you are paid. Now, it's usually the case the wages received for work done prior to a claim being filed are not considered deductible or disqualifying if paid while collecting benefits IF the individual can prove when the work was done to earn those wages. When you had the telephone interview and then subsequent appeal hearings did you have any proof that these delayed payments were earned prior to you filing your UI claim? Also, again, employees do not pay into unemployment, for as long as I have worked I have never ever payed into unemployment, I can look at years worth of check stubs and not a one, not ONE, check stub says unemployment. Employers and corporations pay into unemployment via their reserve account. Since you were the sole owner of your corporation you would have paid from your reserve account, however, most people are not their own employer. In all honesty and with no insult intended, it seems like there is definitely something missing from your story. I have a long history of dealing with the appeals judges and boards and they are notorious for overturning EDD's decisions, if you claim you have read the code and believe the benefit decisions finding individuals eligible apply to you and you had proof of your allegations as to how the business was run it's hard to believe both the administrative law judge and the board would rule against you. In any case, good luck.

[jvaski]

No, No work performed to consitute "employment " either as corporate officer or employee 6 months prior to filing for benefits. According to two previous law cases won - a person who is actively seeking employment as an individual and for the business is not "actively employed " when his loss of employent is erratic and beyond his control. Had I not specifically phoned the EDD immediately after receiving the "delayed payment" and had their approval to continue benefits after explaination - and no corporate checking activity showing income I would have an arguement. I had a history of these "delayed payments" when a project sold and when the corporation had profit to pay me as employee. I have demanded their phone records of my conversations regarding this "delayed payment" that they admit to having but will not furnish to me.
The EDD tax auditor couldn't accept the fact that I had been living off savings accounts prior to the "delayed payment" and seemed to have a bone of contention with doing anything to prove that I was employed when I was not. I offered to have him review my corporate checking as evidence of no buisness - but he declined. The administrative law judge was very rude, did not let me explain my case, and had seemingly predetermined my case before the hearing. The appeals process is a joke.......non-existant and biased - not allowing any evidence I offered in defense. It's going to be necessary to take this into superior court for a non-biased decision and my ability to show evidence.
I know when I'm employed or not ........it's a simple matter of whether or not I had any jobs and income ........and I don't expect any sympathy since I am another "wealthy contractor with deep pockets " in most eyes. But I know when I am unfairly railroaded ..... my accountant agreed and attempted to furnish a statement for evidence which was also denied.
There is nothing missing from my story, I have absolutley nothing to hid, and my books will prove that there was no business or employment.

An EDD supervisor told me that the tax auditor dept. is primarily responsible for making sure that the employer is paying it's fair share of unemployment tax ( per claimant ). And, that they will ask the U.I. recipient for wage stubs in an effort to determine this. Is this correct ? If not, what is the real function of the tax auditor dept ? In your case, are they pursuing you because you are being viewed as an employer ?

NO, they are pursuing me because they don't like the fact that I am the sole owner of my corporation and also the employee. They fail to recognose the fact that the corporation and employee are legally two seperate entities. They obviously want to discredit the legitimacy of these seperate entities and a corporation in my opinion.