Article 8 - Offers in Compromise

California Unemployment Insurance Code — §§ 1870-1875

Sections (6)

Added by Stats. 1993, Ch. 356, Sec. 3. Effective January 1, 1994.

(a)When an employer or any individual assessed under Section 1735 owes delinquent contributions, withholdings, penalty, or interest to the department, the director may enter into an agreement to accept partial payment in satisfaction of the full liability under the following conditions when he or she believes that it will be in the best interest of the state.

(1)Offers in compromise shall be considered only for liabilities of inactive out-of-business accounts, and of individuals assessed under Section 1735 or partners only if the individual assessed or partner no longer has a controlling interest or association with the business that incurred the liability to which the offer in compromise applies.

(2)The employer, individual assessed under Section 1735, or partner does not have access to current income sufficient to pay more than the accumulating interest and 6.7 percent of the liability on an annual basis.

(3)The employer, individual assessed under Section 1735, or partner does not have reasonable prospects of acquiring increased income or assets that would enable him or her to liquidate the liability in a reasonable period.

(4)The employer, individual assessed under Section 1735, or partner does not have assets, whether or not subjected to lien by the department, that if sold, would satisfy the liability.

(5)The amount offered in compromise is more than the department could reasonably expect to collect through involuntary means during the four-year period beginning on the date on which a compromise agreement is tendered by the employer, individual assessed under Section 1735, or partner.

(6)The compromise offer is submitted by the taxpayer in writing and is accompanied by cash, a cashier’s check, or money order equal to the amount offered in compromise.

(7)Only nondisputed, final tax liabilities shall be considered for compromise.

(8)Liabilities that arose as a result of fraud or actions that resulted in a conviction for a violation of this code shall not be compromised.

(b)When in the director’s judgment it serves the best interest of the state, the director may permit the agreed upon amount to be paid in installments under a payment agreement not to exceed five years in length.

(c)The employer or individual submitting an offer shall be notified in writing when an offer in compromise is accepted or rejected.

(1)Moneys paid to the department along with an offer shall not be applied against the liability by the department until the offer has been accepted or rejected.

(2)In the event an offer is rejected, the amount will either be applied to the liability or refunded, at the discretion of the employer or individual submitting the offer.

§ 1871

Added by Stats. 1993, Ch. 356, Sec. 3. Effective January 1, 1994.

No agreement negotiated by the director under Section 1870 that reduces any liability by ten thousand dollars ($10,000) or more shall be effective until it is reviewed and approved by the Unemployment Insurance Appeals Board. In reviewing any agreement, the Unemployment Insurance Appeals Board shall be restricted to determining, based on the case file submitted by the director, whether the director has exercised due diligence in determining whether the conditions set forth in subdivision (a) of Section 1870 have been satisfied.

§ 1872

Added by Stats. 1993, Ch. 356, Sec. 3. Effective January 1, 1994.

A determination by the director that it would not be in the best interest of the state to accept partial payment in satisfaction of a tax liability shall not be subject to administrative appeal or judicial review.

§ 1873

Added by Stats. 1993, Ch. 356, Sec. 3. Effective January 1, 1994.

(a)Once the terms of the compromise agreement are fulfilled, including payment of the amount offered, the following shall occur:

(1)The liability shall be considered satisfied in full.

(2)All tax liens filed or recorded, or both, in accordance with Article 1 (commencing with Section 1701) shall be released.

(3)A statement shall be placed on file with the department containing the following information:

(A)The taxpayer’s name and identification number.

(B)The year or years and quarter or quarters involved.

(C)The reason or reasons the liability was reduced by an offer in compromise.

(D)The total amount of unpaid tax, interest, additions to tax, and penalties at issue in the compromise.

(E)The terms of the offer in compromise.

(F)The total amount paid under the offer in compromise.

(b)All records of compromise required to be kept by the department may be reviewed as part of the annual single audit of the Employment Development Department.

(c)The department shall do all of the following:

(1)Notify the employer or individual submitting the offer in writing that the terms of the compromise agreement have been fulfilled, and that all liens filed or recorded, or both, in accordance with Article 1 (commencing with Section 1701) against the taxpayer’s interests have been released.

(2)Furnish the employer or individual submitting the offer with a copy of the statement that is on file in accordance with paragraph (3) of subdivision (a).

(d)For a period of one year from the date that the statement is placed on file as required under paragraph (3) of subdivision (a), the statement shall be available for public inspection. However, no lists shall be distributed by the department in connection with these statements.

§ 1874

Added by Stats. 1993, Ch. 356, Sec. 3. Effective January 1, 1994.

In cases of joint and several liability, and where amounts are owed under Section 1735, an agreement under Section 1870 to accept partial payment in satisfaction of the liability of one or more debtors shall neither relieve any other debtors of the obligation to liquidate the entire balance of the debt remaining unpaid, nor grant to the debtor or debtors any right to appeal or seek judicial review of the director’s determination.

§ 1875

Amended by Stats. 1994, Ch. 146, Sec. 217. Effective January 1, 1995.

(a)If an offer under Section 1870 to accept partial payment in satisfaction of the liability has been accepted, and it is subsequently determined that any person willfully did any of the following, the acceptance shall be rescinded and all compromised liabilities shall be reestablished without regard to any statute of limitations that is applicable to this division:

(1)Concealed from any officer or employee of the state any property belonging to the estate of the employer or other person liable with respect to the tax.

(2)Received, withheld, destroyed, mutilated, or falsified any book, document, or record.

(3)Made any false statement relating to the estate or financial conditions of the employer or other person liable with respect to the tax.

(4)Failed to pay any tax liability owed the department for any subsequent, active business in which the employer or individual who previously submitted the offer in compromise has a controlling interest or association.

(b)Upon any rescission pursuant to subdivision (a), the department, at its discretion, may file a Notice of State Tax Lien against the individuals or entity responsible for the previously compromised liability.

(c)For all rescissions under subdivision (a), the department shall notify the employer or individual who previously submitted the offer in compromise in writing of both of the following:

(1)The rescission of any offer and reasons therefor.

(2)The amount of reestablished liability that is due and payable.