Collections and Violations of Withholding on Tax in California

As you might imagine, California’s Unemployment Insurance Code provides a number of provisions related to collections and how violations will be addressed. These statutes are found in Division 6, Chapter 5 of the UI Code. Section 13070 makes the employer liable for the payment of the tax required to be deducted and withheld. Whenever any employer or person has withheld any amount pursuant to this division, the amount withheld is to be held to be a special fund in trust for the State of California.

Section 13071 specifies that, if the employer, in violation of the provisions of this division, fails to deduct and withhold the tax under this division, and thereafter the tax against which the tax may be credited is paid or the taxpayer reports to the Franchise Tax Board the wages or gross income against which the tax would have been imposed, the tax required to be deducted and withheld is not collected from the employer. But it does not relieve the employer from liability for any penalties or additions to the tax otherwise applicable with respect to the failure to deduct and withhold.

Section 13072 authorizes the department by notice that is served personally or by first-class mail, to require any employer, person, officer or department of the state, having in their possession any credits or other personal property or other things of value, belonging to a taxpayer or to an employer or person who has failed to withhold and transmit amounts due to withhold, the amount of any tax, interest, or penalties due from the taxpayer.

Section 13073 states that any employer or person failing to withhold the amount due from any taxpayer and to transmit the amount due to the department after service of a notice is liable for those amounts.

Section 13074 says that any employer or person required to withhold and transmit any amount pursuant to this division must comply with the requirement without resort to any legal or equitable action in a court of law or equity.

Section 13075 provides that, whenever service is authorized upon the state of any notice to withhold, that service to be effective must, in addition to any other requirements, be made on the state agency owing the obligation prior to the time the agency presents the claim for payment thereof to the State Controller.

Section 13076 specifies that, if the employer is the United States, or this state, or any political subdivision thereof, the return of the amount deducted and withheld upon any wages may be made by any officer or employee of the United States, or of such state.

Section 13077 provides that, if a lender, surety, or other person, who is not an employer under such sections with respect to an employee or group of employees, pays wages directly to an employee or group of employees will be liable in his or her own person and estate to the State of California in a sum equal to the taxes (together with interest) required to be deducted and withheld from such wages by such employer.

In Division 6, Chapter 6, there are rules about violations of these laws. Section 13101 states that, in addition to any criminal penalty provided by law, if any individual makes a statement which results in a decrease in the amounts deducted and withheld under this division, and as of the time the statement was made, there was no reasonable basis for the statement, the individual is required to pay a penalty of $500 for the statement. The department may waive, in whole or in part, the penalty imposed under specified conditions.