Fillable Printable De631P
Fillable Printable De631P
De631P
INSTALLMENT AGREEMENT
Employers have a legal obligation to voluntarily report
and pay contributions and withholdings when due.
However, the Employment Development Department
(EDD) recognizes that there are situations where it is in the
best interest of California’s taxpayers that the EDD accept
an installment agreement to liquidate debts due to the
state over a period of time. Please consider the following
information in order to determine whether an installment
agreement is appropriate.
Resources Available to Pay the Liability
Do you have sufficient money of your own to pay this
liability? Can you borrow the money from other sources
to pay the liability? Are there other resources available to
pay the liability which will not force the closure of your
business? If yes, you must make arrangements to pay the
entire amount within 30 days.
NOTE: All employers who fail to file and pay liabilities
timely are subject to the filing of a Notice of State Tax
Lien. This lien is issued to protect the interest of the State
of California and is not considered involuntary collection
action. The filing of a State Tax Lien is an automatic process
and cannot be stopped unless the liability is fully paid.
Requesting an Installment Agreement
If immediate payment is not possible and you have an
established history of timely reporting and payments
with the EDD, and are not insolvent or bankrupt, contact
your assigned representative to negotiate an installment
a
greement. If you’re not currently in contact with a
representative, you may contact the Taxpayer Assistance
Center at 888-745-3886 or visit the EDD website at
www.edd.ca.gov/pdf_pub_ctr/de927b.pdf to obtain an
Installment Agreement Request, DE 927B. When the
completed DE 927B is received, an EDD representative
will contact you to finalize the agreement.
Short-Term Installment Agreement
A
short-term installment agreement can generally be
negotiated. The liability must be satisfied as quickly as
possible. The EDD will require a good faith payment for all
delinquent Quarterly Contribution Return and Report of
Wages, DE 9, Quarterly Contribution Return and Report of
Wages (Continuation), DE 9C, and Payroll Tax Deposit,
DE 88, forms that have not been filed/paid through the
current quarter for tax years 2011 forward. For years prior
to 2011, any delinquent Annual Reconciliation Statement,
DE 7, and Quarterly Wage and Withholding Report,
DE 6, forms must be filed. In addition, the EDD may also
require the taxpayer to complete a Financial Statement,
D
E 926B, for individuals or Financial Statement
for Businesses, DE 926C, or Corporate Information
Questionnaire, DE 204, for installment agreements less
than one year. To obtain the DE 926B and DE 926C,
contact the Taxpayer Assistance Center at 888-745-3886
or visit the EDD website at
www.edd.ca.gov/Payroll_Taxes/Forms_and_Publications.htm.
We will also ask that you sign an Installment Agreement,
DE 927.
The installment agreement will be in effect 10 business
days after a verbal agreement has been established, and
the balance due must be paid in full on or before the
agreed upon completion date.
Long-Term Installment Agreement
The EDD will consider a long-term installment agreement.
Submit a written request for a long-term installment
agreement, addressed to the office that is handling your
account. Your request should include the following:
(1) How the delinquent liability was established and
what action has been taken to resolve the liability.
Submit your proposed payment schedule and
describe how you will keep current on future
financial obligations to the EDD.
(2) A good faith payment.
(3) All DE 9, DE 9C, and DE 88s that have not been filed/
paid through the current quarter for tax years 2011
forward. For years prior to 2011, any delinquent DE 7
and DE 6s must be filed.
You can electronically submit employment tax
returns, wage reports, and payroll tax deposits using
e-Services for Business at
www.edd.ca.gov/e-Services_for_Business to
comply with the e-
file and e-pay mandate. For more
information on this mandate, visit
www.edd.ca.gov/EfileMandate.
(4) Financial information on business as well as personal
a
ssets. The DE 926B and DE 926C are available by
contacting the Taxpayer Assistance Center at
888-745-3886 or from the EDD website at
www.edd.ca.gov/Payroll_Taxes/Forms_and_
Publications.htm, but any recent financial statement
which has substantially the same data is acceptable.
Corporations and all corporate officers, individual
business owners, partnerships, and each general
partner are required to complete financial statements.
Corporate officers should provide personal financial
information as well as information involving the
corporation.
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(5) Corporations, limited liability companies (LLC), and
limited liability partnerships (LLP) will be required
to complete a DE 204. The form establishes the
responsible persons of the corporation, LLC, or
LLP. Responsible persons who willfully fail to pay
contributions, withholdings, penalties, and interest
on the date they become delinquent may be held
personally liable.
Provide Supportive Documentation
It is your responsibility to provide the information
necessary to substantiate your inability to pay the full
amount due. Provide sufficient documentation such
as loan denials from financial institutions, tax returns,
the past three months’ bank statements, CPA financial
reports, etc.
We may request documentation to support your entries
on the financial statement. For instance, if you state that
your monthly income is $2,500, we may require proof of
that income. If your utility bill is $200 per month, we may
request copies of your utility bills.
We may also request a credit bureau report periodically to
help clarify your financial situation.
The Agreement
In negotiating the installment agreement, numerous factors
are considered. However, the principal factor is whether
the interests of the taxpayers of California would be best
served by accepting the agreement. Generally, this occurs
when an installment agreement will allow a business
that would otherwise be forced to close, to continue in
operation and to pay all debts owed to the state.
Your past history with the EDD should indicate your ability
and willingness to honor the terms of the agreement. This
means you have an established history of timely reporting
and payments with us.
Once an agreement is reached, the plan will remain in
effect for the period negotiated unless you:
(1) Fail to make payments as agreed. This includes
nonpayment, late payment, paying less than agreed,
or checks returned by your bank unpaid.
(2) Incur additional liability after the agreement is
negotiated. Additional liability usually arises because
you do not pay current taxes. This condition would not
apply if the additional liability results from a
nonfraudulent assessment covering a prior period.
(3) Fail to file all required reports and/or DE 88s on a
timely basis without good cause.
(4) Fail to submit timely an Interim Contribution Return,
DE 2858, with payment when specifically required as
a condition of the agreement.
(5) Are found to have intentionally provided false,
materially inaccurate, or incomplete information. This
does not apply to simple mistakes.
NOTE: Failure to meet the terms of the installment
agreement may result in involuntary collection action,
including, but not limited to, seizure and sale of assets.
Finalizing the Installment Agreement
When all the necessary information, forms, and
supporting documentation have been received, we will
review the data and contact you to finalize the installment
agreement, if appropriate, or request payment in full.
When the installment agreement has been approved, you
will receive a DE 927. You must return the signed form
and first payment to your EDD representative within
10 business days. The installment agreement will not be
in effect until the signed DE 927 is received.
Additional Information
If you have entered into a valid installment agreement
and an audit assessment is issued, you should be
prepared to renegotiate the terms of the agreement. The
exception to this general rule would be if the auditor
applied the penalty under Section 1128 of the California
Unemployment Insurance Code (CUIC) in the
assessment. In most cases, you should be prepared to pay
this assessment in full.
If you have either a significant improvement or
deterioration in your financial circumstances during the
repayment period, contact the EDD immediately. When
you voluntarily provide updated financial information, the
terms of the agreement can be renegotiated. If the EDD
determines during a periodic review that your financial
condition has improved and you did not notify us, the
installment agreement may be voided immediately.
Please note that even if the installment agreement is
approved, offsets of any state refunds and federal income
tax refunds will be enforced during the payment term. Any
payments received from these sources will be in addition
to the installment payments.
The EDD is an equal opportunity employer/program.
Auxiliary aids and services are available upon request to
individuals with disabilities. Requests for services, aids,
and/or alternate formats need to be made by calling
888-745-3886 (voice) or TTY 800-547-9565.
This information sheet is provided as a public service, and is intended to provide nontechnical assistance. Every attempt has been made to
provide information that is consistent with the appropriate statutes, rules, and administrative and court decisions. Any information that is
inconsistent with the law, regulations, and administrative and court decisions is not binding on either the Employment Development
Department or the taxpayer. Any information provided is not intended to be legal, accounting, tax, investment or other professional advice.
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