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PERSONAL INCOME TAX ADJUSTMENT PROCESS 

If the Employment Development Department (EDD) audits the         2.  Recalculation of PIT Based on Single With Zero 
employer’s business records and determines that the employer                  Allowances (S-0) 
failed to properly withhold California Personal Income Tax 
                                                                              If the employer does not have a signed Form W-4 or 
(PIT) from the wages paid to the workers, the EDD will issue 
                                                                              DE 4 from the worker, the employer may use 
an assessment for the PIT that should have been withheld. 
                                                                              a fling status of Single with zero allowances 
However, the employer has the opportunity to gain relief 
                                                                              (S-0) to recalculate the PIT. This may reduce 
from some or all of the PIT liability, and related penalties and/ 
                                                                              the amount assessed below the estimated 
or interest, through the use of the Claim for Adjustment or 
                                                                              level. The employer must submit a completed 
Refund of Personal Income Tax, DE 938P. The Declaration, 
                                                                              worksheet for each worker assessed when the 
DE 6028P, may be used to gain relief from some or all of the 
                                                                              employer recalculates PIT using this method. 
PIT assessed and some of the interest, however, the penalties 
will not be reduced. Please read the following information        3.  Recalculation of PIT Using a Reasonable Sample 
carefully before completing these forms. 
                                                                              If the auditor included a large number of workers in 
NOTE: The relief granted for PIT through the use of the                       the PIT assessment, the employer may use a reasonable 
following methods does not adjust the assessed liability for                  sample to recalculate the PIT that should have been 
Unemployment Insurance, Employment Training Tax, or                           withheld. 
State Disability Insurance.* 
                                                                              The sample must include at least four representative 
FIVE METHODS FOR ADJUSTING A PIT ASSESSMENT                                   pay periods during the most recent calendar year for 
PIT may be adjusted using one or more of the following                        which the unreported wages are equal to or greater 
methods:                                                                      than the average unreported wages per pay period.  
1.  Recalculation of PIT Based on the Worker’s Federal                        The employer must schedule the individual wage 
or California’s Employee Withholding Allowance                                payments for the four pay periods, calculate the 
Certifcate, Form W-4/DE 4                                                     percentage of PIT that should have been withheld 
                                                                              from each wage payment based on the Form W-4/ 
The employer may reduce the PIT assessment, and 
                                                                              DE 4 or S-0 fling status, and apply that percentage to 
related penalties and interest, by recalculating the 
                                                                              the total unreported wages for the four pay periods to 
amount of PIT that should have been withheld. 
                                                                              recalculate the total PIT.  
If the auditor assessed PIT at a fat rate or estimated 
                                                                              The EDD will adjust the assessment if the PIT 
at six percent (6%) due to the unreported wages 
                                                                              percentage from the sample is less than the fat rate 
being unallocated and/or the payroll periods not 
                                                                              percentage used in the audit assessment. 
clearly identifed, and the employer has a signed 
Form W-4 or DE 4 from the worker during the time                  4.  Certifcation by the Worker That the Wages Were 
that he or she worked for the employer, the employer                          Reported to the Franchise Tax Board (FTB) on a       
may recalculate their PIT withholding. Use the fling                          DE 938P 
status and number of allowances on the Form W-4 
or DE 4 and the appropriate tax withholding table                             The employer may be relieved of PIT assessed for any 
in the California Employer’s Guide, DE 44, for the                            worker who certifes that he or she reported the wages 
year(s) of the assessment. The employer must submit a                         on his or her California state income tax return. The 
completed worksheet for each worker assessed when                             worker must complete the DE 938P, items (5) 
the employer recalculates PIT using this method.                              through (7). 
Prior year PIT withholding schedules are available                            This certifcation does not relieve the employer from 
on the EDD website at www.edd.ca.gov/                                         penalties for failure to withhold PIT, or from certain 
Payroll_Taxes/Rates_and_Withholding.htm.                                      portions of the interest on the PIT assessment. For 
                                                                              this reason, it may be to the employer’s advantage to 
                                                                              also recalculate PIT using one of the other methods 
                                                                              described above. 
*Includes Paid Family Leave (PFL) 

DE 231W Rev. 11 (9-17)  (INTERNET)                           Page 1 of 2                                                             CU 



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5.  Declaration That the Workers Were Issued a Federal Form         the worker’s certifcation and signature after the worker 
1099, Form W-2, or Schedule K-1 on the DE 6028P**                   has fled his or her California state income tax return with 
                                                                    FTB for the current and/or last completed calendar year. 
The employer may be relieved of the PIT assessed if 
                                                                    However, the employer may submit DE 938P(s) at any time 
the employer can declare under penalty of perjury that 
                                                                    for those workers who have fled quarterly estimates with 
the workers were issued a Form1099-MISC,Form W-2 
                                                                    FTB and have signed a DE 938P. 
(which includes state and local income tax information 
for the State of California), or Schedule K-1, and that 
                                                                    TIME LIMITS TO FILE CLAIMS FOR REFUND 
the forms were fled timely with the Internal Revenue 
Service (IRS) and/or the FTB. Be advised that the                   Filing forms DE 938P and DE 6028P with the EDD 
DE 6028P is signed under penalty of perjury.                        constitutes a claim for refund under Section 1178 of the 
                                                                    California Unemployment Insurance Code (CUIC). There is 
If the employer can make this declaration under 
                                                                    no time limit for submitting these forms when the assessed 
penalty of perjury, the DE 6028P should be completed 
                                                                    PIT has not been paid. However, if the assessed PIT has 
and submitted to the auditor. The EDD may verify with 
                                                                    been paid, Section 1178 of the CUIC provides strict time 
the workers, the IRS, or the FTB that the forms were 
                                                                    limits for fling a claim for refund with EDD. Claims for 
furnished and fled. 
                                                                    refund must be fled either: 
If your Form(s) W-2 are fled by your agent, it is your 
                                                                    •  Within three years from the last day of the calendar 
responsibility to verify that the electronic Form(s) W-2 
                                                                             month following the close of the calendar quarter for 
fle contains information about state and local income 
                                                                             which the overpayment was made. 
taxes for the State of California. If the Form(s) W-2 fles 
                                                                    •  Within six months after the assessment becomes fnal. 
contain another state’s income tax information or did 
                                                                    •  Within 60 days from the date of overpayment, 
not contain any state income tax data, the DE 6028P 
                                                                             whichever period expires later. 
process should not be used. You may request to be 
relieved of the PIT assessed through any of the other               NO EXTENSION OF TIME TO FILE PETITION FOR 
four available methods.                                             REASSESSMENT 
This declaration does not relieve the employer from                 A complete explanation of the employer’s appeal rights is 
penalties for failure to withhold PIT, or from certain              included with the offcial Notice of Assessment, DE 6517. 
portions of the interest on the PIT assessment. For                 If the employer chooses to fle a petition for reassessment, 
this reason, it may be to the employer’s advantage to               the employer must fle it within 30 days from the date of 
also recalculate PIT using one of the other methods                 the assessment. 
described above. 
                                                                    The PIT adjustment process DOES NOT extend the time 
Note: Even if the employer uses the worker certifcation             limit for the employer to fle a petition for reassessment. If 
adjustment (Method 4), or declaration (Method 5), it may            the employer wishes to fle a petition for reassessment, the 
be to the employer’s advantage to recalculate the PIT using         employer must fle it within 30 days from the date of the 
Method 1, 2, or 3 in order to receive the greatest possible         assessment. Refer to Section 1222 of the CUIC. 
adjustment to the PIT assessment. 
                                                                    Note: If the employer failed to pay the assessment amount 
RECALCULATION OF INTEREST                                           on or before the assessment becomes fnal, a ffteen percent 
                                                                    (15%) penalty of the delinquent contributions will be 
Interest will be recalculated when the worker certifes on 
                                                                    added pursuant to Section 1135 of the CUIC. Additionally, 
the DE 938P that he or she paid quarterly estimated taxes 
                                                                    failure to fle a petition and untimely payment of the 
to the FTB. Interest will also be recalculated when the 
                                                                    assessment amount will result in state tax liens being fled. 
worker certifes that the wages were reported on his or her 
California state income tax return. Generally, the employer         ADDITIONAL INFORMATION 
is relieved of any interest charged for periods after the 
worker paid the taxes or fled the return.                           When the employer has completed the DE 938P(s) and/or 
                                                                    DE 6028P(s), the forms should be sent to the offce shown 
SPECIAL INSTRUCTIONS FOR CURRENT YEAR AND                           on the front. If you need assistance in completing any part 
LAST COMPLETED CALENDAR YEAR PIT ASSESSMENT                         of the PIT adjustment process, please contact the auditor. 

DE 938P                                                             The EDD is an equal opportunity employer/program.  
If the EDD assessed PIT on wages for the current year and/          Auxiliary aids and services are available upon request to 
or prior completed calendar year(s), the employer must              individuals with disabilities. Requests for services, aids, 
prepare separate DE 938P(s). The employer may obtain                and/or alternate formats need to be made by calling 
                                                                    888-745-3886 (voice) or TTY 800-547-9565. 
**The DE 6028P only applies to audits completed after July 1, 2008. 
This information sheet is provided as a public service and is intended to provide nontechnical assistance. Every attempt has been made 
to provide information that is consistent with the appropriate statutes, rules, and administrative and court decisions. Any information that 
is inconsistent with the law, regulations, and administrative and court decisions is not binding on either the Employment Development 
Department or the taxpayer. Any information provided is not intended to be legal, accounting, tax, investment, or other professional advice. 
DE 231W Rev. 11 (9-17)  (INTERNET)                          Page 2 of 2                                                                      CU 






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