Refunds and Overpayments under the UI Code

Refunds and overpayments are addressed in the California Unemployment Insurance Code in Division 1, Part 1, Chapter 4, Article 9. Section 1176 states that the wages received by an employee during any calendar year exceed the remuneration upon which contributions are payable, and the sum of the amount of tax imposed plus the amount of contributions deducted from wages exceeds the amount required under this division, the employee is entitled to a refund or credit of the amount of the excess.

Section 1176.5 provides refunds and credits are to be claimed on the personal income tax return of the claimant for the year in which the wages in excess of the applicable limitation are received. In no event can the credit or refund be made unless the claim is made on a return filed within three years from the last day prescribed for filing the return, without regard to any extensions. The director is required to transfer from the Disability Fund to the General Fund an amount equal to the amount of credits and refunds allowed by the FTB.

If the FTB disallows an individual’s claim filed, he or she may file a protest and submit the claim to the director within 30 days of the date of mailing of the notice of disallowance by the FTB. An additional 30 days for the filing of the protest may for good cause be granted by the director.

Section 1177 provides, if the director determines that any amount of contributions, penalty or interest has been erroneously or illegally collected, then the director is required to set forth on the records of the department the amount collected in excess of the amount legally due and the name of the employing unit or other person by whom it was paid and must refund the amount to the employing unit or other person by whom it was paid if the amount does not include refundable worker contributions.

Section 1177.5 specifies that, if the director determines that an overpayment has been made to the department by an employing unit or the School Employees Fund because of a reason specified in this subdivision, and the amount of the overpayment has been reimbursed to the state by the federal government, then the director must credit the employing unit or the School Employees Fund with the amount of that overpayment, provided that the director determines that the overpayment was made because of one of the three specified reasons. However, no overpayment is to be refunded to an employing unit or to the School Employees Fund.

Section 1178 specifies that a claim for refund or credit may be filed with the director for any overpayment including, but not limited to, amounts paid subsequent to the filing for record of a certificate. In addition, no refund is to be made or credit allowed unless a claim has been filed with the director within three years from the last day of the calendar month following the close of the calendar quarter for which the overpayment was made or within six months after assessments made become final or within 60 days from the date of overpayment, whichever period expires the later.

Section 1179 states that every claim for refund or credit must be made in writing and state the specific grounds upon which the claim is founded. A waiver of any demand against the state or the director on account of overpayment applies when any of the specified circumstances occur.

Section 1179.5 provides that, if an employing unit pays the amount of contributions, penalties, and interest assessed before an administrative law judge issues his decision upon a petition for reassessment filed on such assessment, the payment constitutes the filing of a claim for refund; or, before the appeals board issues its decision upon an appeal from the administrative law judge’s decision on a petition for reassessment, the payment will constitute the filing of a claim for refund.

Section 1180 requires the director to give notice to the claimant whenever he or she denies any claim for refund or credit in whole or in part.

Section 1180.5 states that, if the director finds that a claim for refund or credit or portion thereof, including a claim deemed made and denied has been erroneously denied, he or she may reverse the denial of the claim or portion thereof in the two specified cases.

Section 1181 requires interest to be allowed and paid only to the extent that interest and penalties collected under this division are available therefor upon any overpayment of contributions at the adjusted rate per month, or fraction thereof, from the date of overpayment to the date of the allowance of the refund or credit, but no interest is allowed if the director determines that any overpayment was made intentionally or by reason of negligence on the part of the employing unit.

Section 1184 states, if any refund or portion thereof is erroneously made, the director is required to assess that amount to the employing unit or other person to whom the refund was made, together with any interest paid, but no assessment is to be made with respect to any amount of worker contributions which the employer has refunded to his or her employees. In addition, the director is required to give the employing unit against whom the assessment is made a written notice of the assessment.