2005 California Unemployment Insurance Code Sections 1126-1145 Article 8. Assessments

UNEMPLOYMENT INSURANCE CODE
SECTION 1126-1145

1126.  If any employing unit fails to make a return or report as
required under this division, the director shall 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 shall compute and assess the amounts
of employer and worker contributions payable by the employing unit,
adding thereto a penalty of 10 percent of the amount of
contributions.
1126.1.  (a) If any employing unit fails to register with the
department as required under Section 1086, and the failure is due to
intentional disregard or intent to evade this division or authorized
regulations, a penalty of one hundred dollars ($100) per nonreported
employee shall be added to an assessment issued in accordance with
Section 1126.
   (b) For purposes of this section, the number of nonreported
employees shall be defined as the highest number of employees
determined by the department to have been engaged by the employer
during any single calendar quarter included in the assessment under
Section 1126.
1127.  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.  If any part of the
deficiency is due to negligence or intentional disregard of this
division or authorized regulations, a penalty of 10 percent of the
amount of the deficiency shall be added to the assessment.
1127.5.  (a) If the director determines that an individual or entity
that is reporting employee wages pursuant to Section 1088 or other
applicable sections is not the correct employer of the employees
whose wages are reported, the director shall determine the correct
employer and, subject to this section, shall apply the provisions of
this code to the correct employer.
   (b) Upon a determination made under subdivision (a), the director
shall give notice of the determination pursuant to Section 1206 to
both of the following:
   (1) To the individual or entity reporting employee wages of the
determination that the individual or entity is not the correct
employer of the reported employees.
   (2) To the individual or entity determined to be the correct
employer of those reported employees.
   The notice shall contain a statement of the facts and
circumstances upon which the determination was based.  An individual
or entity so noticed shall have the right to petition for review of
the determination within 30 days of the notice, as provided in
Section 1222.
   (c) During the pendency of a petition for review pursuant to
subdivision (b), the individual or entity responsible for reporting
employee wages pursuant to Section 1088 or other applicable sections
shall be determined as follows:
   (1) When an individual or entity that has reported employee wages
appeals a director's determination that it is not the correct
employer of the employees whose wages were reported, that individual
or entity shall continue to so report employee wages, provided the
employees in question are still on its payroll, until a decision on
its appeal is final, whether or not the individual or entity
determined to be the correct employer by the director appeals that
determination.
   (2) When the individual or entity determined by the director to be
the correct employer appeals that determination, but the individual
or entity determined not to be the correct employer does not appeal
the director's determination, then the individual or entity
determined to be the correct employer by the director shall report
employee wages from the date it received notification pursuant to
subdivision (b), and, provided the employees in question are still on
its payroll, shall continue to do so at least until a decision on
its appeal is final.
   (d) When a director's determination that an individual or entity
is the correct employer of employees whose wages have been reported
by another individual becomes final:
   (1) The individual or entity so determined to be the correct
employer may be assessed for any underpayment of employer
contributions pursuant to Article 8 (commencing with Section 1126) of
Chapter 4 of Part 1 of Division 1.  No assessment shall be issued
for any period prior to the effective date of this section based on
which individual or entity is the correct employer, unless the
correct employer committed fraud in violation of this part.
   (2) The individual or entity which had reported employee wages
prior to the finality of the director's determination of the correct
employer of the employees whose wages were so reported may file a
claim for refund for any overpayment of employer contributions
pursuant to Section 1178.  No claim for refund may be filed for any
period prior to the effective date of this section based on which
individual or entity is the correct employer unless the department
has issued an assessment based on fraud pursuant to paragraph (1).
1128.  (a) 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 percent of the amount of
contributions assessed shall be added to the assessment.  This
penalty is in addition to the penalties provided pursuant to Sections
1126 and 1127.
   (b) An additional penalty of 50 percent of the amount of
contributions assessed shall be added to any assessment that includes
a penalty under subdivision (a), if the employer paid wages and
failed to provide information returns as required under Section 13050
of this code or  Section 6041A of the Internal Revenue Code.  This
penalty shall be in addition to any penalties under Section 1126 or
1127.
1128.1.  (a) 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 any provision of this code, the
director shall assess a penalty against the individual or business
entity in an amount equal to 100 percent of any assessed
contributions that were based on the concealed wages.  An employing
unit subject to a penalty under Section 1128 shall not be assessed a
penalty under this section for the same violation.
   (b) For purposes of this section, "business entity" means a
partnership, corporation, association, limited liability company, or
Indian tribe (as described by subsection (u) of Section 3306 of Title
26 of the United States Code).
   (c) The penalty shall apply only when there is evidence that the
individual or business entity who exchanged money knew that the
employer intended to use the cash proceeds from the exchange to
conceal the payment of wages and thereby avoid the payment of
contributions or taxes required by this code.
1129.  The amount of each assessment shall bear interest at the
adjusted annual rate and by the method established pursuant to
Section 19521 of 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.
1130.  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.
1131.  The director shall give to the employing unit against whom an
assessment is made a written notice of the assessment pursuant to
Section 1206.
1132.  Except in the case of failure without good cause to file a
return or report, fraud or intent to evade any provision of this
division or authorized regulations, every notice of assessment shall
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.  An employing unit may waive this
limitation period or may consent to its extension.
   In case of failure without good cause to file a return or report,
every notice of assessment shall 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.  An employing unit may waive this limitation period or may
consent to its extension.
1135.  Assessments under this article become delinquent if not paid
on or before the date they become final pursuant to Sections 1036,
1221, 1222, and 1224.  There shall be added to the amount of each
delinquent assessment a penalty of 10 percent of the amount thereof
exclusive of interest and penalties.
1136.  If the director finds that an assessment or portion thereof
has been erroneously made, he may cancel the assessment or portion
thereof in the following cases:
   (a) Where no petition for reassessment has been filed.
   (b) Where a petition for reassessment is filed, if the
cancellation is made prior to the mailing of a decision of the
administrative law judge.
   (c) Where a petition for reassessment has been filed and an order
or decision of an administrative law judge or of the appeals board
has been issued on any grounds not on the merits, if the cancellation
is approved by the appeals board.
1137.  (a) If the director finds, in accordance with Section 1137.1,
that the collection of any contributions will be jeopardized by
delay the director shall thereupon make an assessment of those
contributions, served pursuant to Section 1206, noting upon the
assessment that it is a jeopardy assessment levied under this section
and the facts upon which the director finds that collection of
contributions will be jeopardized by delay.  The amount of the
assessment shall be immediately delinquent, whether or not the time
otherwise allowed by law or authorized regulations has expired.  When
applicable, the penalties provided in Sections 1126, 1127, and 1128,
and interest under Section 1129, shall attach to the amount of the
contributions specified in the jeopardy assessment.  Penalties under
Section 1135 shall apply if payment is not made, or security for
payment is not provided, within 30 days of service of a jeopardy
assessment.
   (b) In levying the assessment, the director may demand a deposit
of such security as the director deems necessary to ensure compliance
with this division, including additional security from time to time,
but not more frequently than monthly, in the amount of accumulating
interest.  The deposit of sufficient security to ensure compliance
shall stay other collection action by the director while the
assessment is under review.  The deposit of the sufficient security
shall not be a condition for the exercise of the review and appeal
rights of the employer pursuant to Sections 1221, 1222, 1223, and
1224.  The filing of a petition for reassessment pursuant to Section
1221 shall not stay collection action by the director while the
assessment is under review, but shall stay the sale of all property
other than perishable goods seized by the director pursuant to the
collection action until a final decision from a preliminary hearing
pursuant to subdivision (b) of Section 1221 is issued by the
administrative law judge or the board.
1137.1.  A jeopardy assessment may be made only upon a finding by
the director, based upon probable cause, that any of the following
conditions are met:
   (a) The employing unit is insolvent.
   (b) The employing unit has transferred, or is about to transfer,
assets for less than fair market value, and by so doing has rendered,
or is likely to render, itself insolvent.
   (c) The employing unit has been dissolved.
   (d) Any person liable for the employing unit's contribution, or
any owner, officer, director, partner, or other person having charge
of the affairs of the employing unit has departed or is about to
depart the State of California and that the departure is likely to
deprive the director of a source of payment of the employing unit's
contribution.
   (e) Any person referred to in subdivision (d), or the employing
unit, is secreting assets or is moving, placing, or depositing assets
outside of the state for the purpose of interfering with the orderly
collection of any contribution.  The moving, placing, or depositing
of assets outside of the state which constitutes a regular business
practice and which does not in any way deplete the assets of the
employing unit shall not be deemed to be interfering with the orderly
collection of any contribution under this subdivision.
   (f) The assessment to be issued against the employing unit or an
individual includes a penalty under subdivision (a) of Section 1128
or Section 1128.1.
1141.  When an assessment for worker contributions that is made
pursuant to the provisions of this article becomes final against a
farm labor contractor, as defined in Section 1682 of the Labor Code,
which is an employing unit, as defined in Section 135 of this code,
or such farm labor contractor is otherwise delinquent in the payment
of worker contributions, the department shall notify the Labor
Commissioner, in writing, of the amount of the delinquency of such
employing unit, and shall further notify the Labor Commissioner, in
writing, when such delinquency is paid.  The notice of assessment and
the amount of any delinquency shall be admissible in evidence in any
action or special proceeding arising out of the provisions of
Chapter 3 (commencing with Section 1682) of Part 6 of Division 2 of
the Labor Code.
1141.1.  The director shall notify the United States Internal
Revenue Service and the United States Department of Labor of the
failure of any Indian tribe (as described by subsection (u) of
Section 3306 of Title 26 of the United States Code) to pay within 90
days of the final date of an assessment any amounts assessed pursuant
to the provisions of this article.  If the assessment is
subsequently paid by the Indian tribe, the director shall notify the
United States Internal Revenue Service and the United States
Department of Labor of the satisfaction of the liability.
1142.  (a) 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 pursuant to Section 1030,
1327, 3654, 3701, 4654, or 4701, willfully makes a false statement or
representation or willfully fails to report a material fact
concerning that termination, the director shall assess a penalty
against the employer in an amount not less than 2 nor more than 10
times the weekly benefit amount of that claimant.
   (b) If the director finds that any employer or any employee,
officer, or agent of any employer, in submitting a written statement
concerning the reasonable assurance, as defined in subdivision (g) of
Section 1253.3, of a claimant's reemployment, as required by
subdivisions (b), (c), and (i) of Section 1253.3, willfully makes a
false statement or representation or willfully fails to report a
material fact concerning the reasonable assurance of that
reemployment, the director shall assess a penalty against the
employer in an amount not less than two nor more than 10 times the
weekly benefit amount of that claimant.
   (c) This article, Article 9 (commencing with Section 1176) of this
chapter with respect to refunds, and Chapter 7 (commencing with
Section 1701) of this part with respect to collections shall apply to
the assessments provided by this section.  Penalties collected under
this section shall be deposited in the contingent fund.
1143.  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 shall assess a penalty against the
individual in the amount of 25 percent of the benefits paid as a
result of the false certification.  The provisions of this article,
the provisions of Article 9 (commencing with Section 1176) with
respect to refunds, and the provisions of Chapter 7 (commencing with
Section 1701) with respect to collections shall apply to the
assessments provided by this section.  Penalties collected under this
section shall be deposited in the contingent fund.
1144.  (a) Any employer who induces, solicits, or coerces an
employee to file a false or fraudulent claim for benefits shall be
assessed a penalty in an amount equal to 100 percent of the liability
established under Sections 1375 and 1375.1 against the employee.
Amounts collected under this section shall be deposited in the fund
from which the overpayment was made and as prescribed in Section
1375.1, in the following order of priority:
   (1) First to the fund from which the overpayment was made, up to
the total amount of the benefit overpayment liability assessed
against the employee under Section 1375.
   (2) Second to the Benefit Audit Fund, up to the total amount
assessed against the employee under Section 1375.1.
   (b) The reserve account of any employer who is assessed under this
section shall not be relieved of the charges for benefits related to
the fraudulent claim.
1145.  (a) 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:
   (1) A penalty of five thousand dollars ($5,000).
   (2) Ten percent of the combined amount of any resulting
underreporting of contribution, penalties, or interest required by
law.
   (b) For purposes of this section, "business entity" means a
partnership, corporation, association, limited liability company, or
Indian tribe, as described in subsection (u) of Section 3306 of Title
26 of the United States Code, or any other legal entity.



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