Article 8. Offers In Compromise of California Unemployment Insurance Code >> Division 1. >> Part 1. >> Chapter 7. >> Article 8.
(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
(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
(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
(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
(c) The employer or individual submitting an offer shall be
notified in writing when an offer in compromise is accepted or
(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.
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.
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
(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
(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
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.
(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
(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
(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.