Assessments under the Unemployment Insurance Code

California’s Unemployment Insurance Code deals with assessments for certain failed reporting under Division 1, Part 1, Chapter 4, Article 8. Section 1126 provides that, if any employing unit fails to make a return or report as required under this division, the director must make an estimate based upon any information in his or her possession or that may come into his or her possession of the amount of wages paid for employment in the period or periods for which no return or report was filed and upon the basis of the estimate the director is required to compute and assess the amounts of employer and worker contributions payable by the employing unit, adding a penalty of 15% of the amount of contributions.

Section 1126.1 states that, if any employing unit fails to register with the department as required, and the failure is due to intentional disregard or intent to evade this division or authorized regulations, a penalty of $100 per nonreported employee will be added to an assessment. The “number of unreported employees” is defined in this section.

Section 1127 provides that, if the director is not satisfied with any return or report made by any employing unit of the amount of employer or worker contributions, he or she may compute the amount required to be paid upon the basis of facts contained in the return or reports or may make an estimate upon the basis of any information in his or her possession or that may come into his or her possession and make an assessment of the amount of the deficiency.

Section 1127.5 specifies that, if the director determines that an individual or entity that is reporting employee wages or other applicable sections is not the correct employer of the employees whose wages are reported, the director must determine the correct employer and, subject to this section, apply the provisions of this code to the correct employer. There are additional procedures that the director must follow in these circumstances.

Section 1128 states that, if the failure of the employing unit to file a return or report within the time required by this division and authorized regulations or if any part of the deficiency for which an assessment is made is due to fraud or an intent to evade this division or authorized regulations, a penalty of 50% of the amount of contributions assessed is added to the assessment.

An additional penalty of 50% of the amount of contributions assessed will be added to any assessment that includes a penalty if the employer paid wages and failed to provide information returns as required.

Section 1128.1 provides that, if the director finds that an individual or business entity has exchanged money on behalf of an employer and the employer used the cash proceeds from the exchange to conceal the payment of wages with an intent to evade a provision of this code, the director is required to assess a penalty against the individual or business entity in an amount equal to 100% of any assessed contributions that were based on the concealed wages. The term “business entity” is defined.

Section 1129 requires the amount of each assessment to bear interest at the adjusted annual rate and by the method established by the Revenue and Taxation Code from and after the last day of the month following the close of the calendar quarter, or from and after the 15th day of the month following the close of the calendar month, for which the contributions should have been returned until the date of payment.

Section 1130 provides that one or more assessments may be made for the amount due for one or for more than one period and overpayments may be offset against underpayments.

Section 1131 requires the director to give to the employing unit against whom an assessment is made a written notice of the assessment.

Section 1132 specifies that fraud or intent to evade any provision of this division or authorized regulations, every notice of assessment must be made within three years after the last day of the month following the close of the calendar quarter during which the contribution liability included in the assessment accrued or within three years after the deficient return or report is filed, or was due, whichever period expires the later.

And, in the case of failure without good cause to file a return or report, every notice of assessment must be made within eight years after the last day of the month following the close of the calendar quarter during which the contribution liability included in the assessment accrued.

Section 1135 says that assessments under this article become delinquent if not paid on or before the date they become final. And, there will be added to the amount of each delinquent assessment a penalty of 15% of the amount exclusive of interest and penalties.

Section 1136 provides that, if the director finds that an assessment or portion of it has been erroneously made, he may cancel the assessment or portion in three specified cases.

Section 1137 says that, if the director finds that the collection of any contributions will be jeopardized by delay, then the director must make an assessment of those contributions, noting upon the assessment that it is a jeopardy assessment levied and the facts upon which the director finds that collection of contributions will be jeopardized by delay.

Section 1137.1 states that a jeopardy assessment may be made only upon a finding by the director, based upon probable cause, that any of the specified conditions are met.

Section 1141 provides that, when an assessment for worker contributions that is made becomes final against a farm labor contractor, the department is required to notify the Labor Commissioner, in writing, of the amount of the delinquency of the employing unit, and also notify the Labor Commissioner, in writing, when the delinquency is paid.

Section 1141.1 requires the director to notify the United States Internal Revenue Service and the United States Department of Labor of the failure of an Indian tribe to pay within 90 days of the final date of an assessment any amounts assessed pursuant to the provisions of this article.

Section 1142 provides, if the director finds that any employer or any employee, officer, or agent of any employer, in submitting facts concerning the termination of a claimant’s employment, willfully makes a false statement or representation or willfully fails to report a material fact concerning that termination, the director is required to assess a penalty of an amount not less than 2 nor more than 10 times the weekly benefit amount of that claimant. The director has to assess this penalty in a specified manner.

Section 1142.1 states that, if the director finds that any employer or any employee, officer, or agent of any employer, in submitting facts concerning the termination of a claimant’s employment, where the claimant was performing services for an educational institution, willfully makes a false statement or representation or willfully fails to report a material fact regarding any week during which the services were performed, the director can assess a penalty against the employer of that claimant in an amount not less than two, nor more than 10, times the weekly benefit amount of that claimant.

Section 1143 states that, if the director finds that any individual falsely certifies the medical condition of any person in order to obtain disability insurance benefits, including family temporary disability insurance benefits, with the intent to defraud, whether for the maker or for any other person, the director is required to assess a penalty against the individual in the amount of 25% of the benefits paid as a result of the false certification.

Section 1144 provides that any employer who induces, solicits, or coerces an employee to file a false or fraudulent claim for benefits are to be assessed a penalty in an amount equal to 100 percent of the liability established against the employee. Amounts collected under this section are to be deposited in the fund from which the overpayment was made and in a specified order of priority.

Section 1145 states that, if the director finds that a person or business entity knowingly advises another person or business entity to violate any provision of this chapter, the director may assess the greater of a penalty of $5,000 or 10% of the combined amount of any resulting underreporting of contribution, penalties, and interest required by law. The term “business entity” is defined.