By Jim Counts , CPA

Possible Recession

The Employment Development

Department ( EDD ) routinely tracks certain data that indicates if a possible recession could be coming soon . In light of that , EDD has been given permission to hire an additional 300 employees to process unemployment insurance ( UI ) benefit claims .

Job Sharing When a downturn occurs , an employer may consider using the EDD work sharing program . In general terms , an employer can reduce the total number of hours to be worked and then reduce the hours worked for each employee in a group of employees . Each employee should qualify for UI benefits while the employer would continue to have the employees working for them .

When business picks up the employer would not have to go looking for qualified new employees as they are already working for the employer , allowing the employer to more easily gear up to normal workloads .

Program requirements and conditions are explained at https :// edd . ca . gov / en / Unemployment / Work _ Sharing _ Program .

Disasters Employers statewide directly affected by the winter storms may request up to a twomonth extension of time from the EDD to file their state payroll reports and / or deposit payroll taxes without penalty or interest . This extension may be granted under California Unemployment Insurance Code ( CUIC ) Section 1111.5 . A written request for extension must be received within two months from the original delinquent date of the payment or return .

For more information , visit https :// edd . ca . gov / en / Payroll _ Taxes / Emergency _ and _ Disaster _ Assistance _ for _ Employers .

Exam and Collections Update EDD has added a new service called Box . com , through which employers and their representatives can provide large files to EDD . Only certain collectors and auditors have access and will initiate the request with the employers to submit the files through the Box application . Files ( up to 15 GB ) may be provided going in both directions and various types ( PDF , Word , PowerPoint , video and images ) may be posted . The system retains the files for 90 days .

EDD does not offer this service for the purpose of responding to notices unless they are already working with an auditor / collector .

Fraud Some employers and tax practitioners wonder what the EDD is doing to fight fraud — and when it occurs , to recover any fraudulent payments .

EDD is approaching fraud from an enterprise perspective and information is shared across branches as soon as they see it in one place . EDD is actively working with local district attorneys on recovering money lost from UI fraud through the courts .

Information on the various programs to try and prevent fraud and , if it occurs , how to go after those that commit fraud along with trying to recover any fraudulent payments can be found at https :// edd . ca . gov / en / about _ edd / fraud-response .

Additional Languages EDD has been adding additional languages that UI claimants may use when they

The EDD has been given persmission to hire an additional 300 employees to process unemployment insurance ( UI ) benefit claims .

contact EDD to file for benefits . Find more information at https :// edd . ca . gov / en / language-resources .

CPA Firms Hiring Remote Workers CPA firms have been hiring remote workers because they are unable to find needed workers locally . An important aspect of this is correctly classifying the workers based on the state law where they do the work .

Several states have defined who is an employee or an independent contractor such to make it difficult to classify a worker as an independent contractor . It may be possible that the other state will classify that CPA an employee of the CPA firm even if the worker CPA has their own CPA practice .

If that is their requirement , then the usual employee benefits and taxes would be due on payments to the worker CPA . The firm may also be required to register as a CPA firm in that state and file state income taxes .

UI Fund Loan The California UI Fund has a loan of about $ 18.9 billion as of March 13 from the federal government . The loan was so the UI Fund could pay worker benefits during the pandemic . Because the loan has not yet been repaid the state FUTA credit is reduced by 0.3 percent each year until the loan is repaid . These additional FUTA taxes are used to pay on the loan . It is possible that in future years the FUTA credit could be reduced by larger amounts each year beginning in 2023 based on two different formulas .

Jim Counts , CPA is owner of James C . Counts II , CPA . You can reach him at james @ countscpa . com .

20 CALIFORNIA CPA MAY 2023 www . calcpa . org