Thanks to my subscription with the Spidell California Taxletter, I am kept update on the latest things happening in California.
My last issue from Spidell indicated that the the Employment Development Department (EDD) is looking for employers who treat workers as independent contractors instead of employees and try to avoid employer-paid payroll taxes.
The EDD is partnering with other state agencies to perform UNANNOUNCED on-site business inspections where noncompliance has been an issue. Currently they are focusing on the following industries:
- Agriculture
- Auto body
- Car wash
- Construction
- Garment manufacturing
- Restaurants
For 2009, the EDD conducted over 5,000 audits. During these audits they identified 70,025 misclassified workers, which resulted in 72.6% of the employers getting assessments. The average assessment was $34,826.
The assessments were high because the EDD figured in the unpaid payroll tax. Then they charged penalties for the following:
- Failure to file returns
- Failure to register with the EDD
- Deficient employer contribution penalty
- Failure to file W-2/1099
This just gives you an idea that California will NOT PLAY NICE. If you have registered yourself or your employees with the California Employment Development Department (EDD), you need to look at this website about registering as an employer .
Also - keep in mind that an employer must submit a copy of Form W-4 or Form DE-4 to the FTB if:
- The employee claims ten or more withholding allowances;
- The employee claims "exempt" and the weekly wages exceeds $200
- The employee makes changes to the pre-printed form, crosses out words, etc
- The employee admits that Form W-4 or DE-4 is false
You can send a copy of the Form DE-4 to the FTB at fax number (916) 843-1094; or mail to the Franchise Tax Board at:
Franchise Tax Board
W-4 Unit MS J-40
P.O. Box 2952
Sacramento, CA 95812-2952
