California DE 2220 Release and Final Payroll Filings

Know what the buyer release addresses

EDD guidance explains that a buyer can face the former employer payroll tax liabilities when acquiring a business or substantially all its assets. The Certificate of Release of Buyer is DE 2220.

The request is made using DE 2220R. EDD Publication DE 3409A describes the requirements, including current and delinquent payroll filings and payment of amounts due.

A CDTFA clearance does not provide this payroll release. Make both requests visible in the closing checklist if the transaction requires them.

Watch the sale specific reporting date

EDD says that if you sell your business and no longer have employees, you must submit the final tax return, wage report and payment, and close the employer payroll tax account within 10 days of selling.

That instruction applies regardless of the usual reporting dates. Do not wait for the next ordinary quarter because that is how payroll has always been reported.

The correct action can differ if you keep another operation or continue employing people. Ask your payroll representative how the sale affects the account rather than closing it automatically.

Give the payroll preparer the closing facts

Provide the seller legal name, employer account details, sale date and the final wage information. Confirm who submits the request and who handles follow up from EDD.

The final reporting set may include DE 9, DE 9C and payroll deposits. Your preparer should use the current instructions for the periods and payments involved.

• Reconcile final wages and deposits before the transfer.
• List outstanding payroll notices and unpaid amounts.
• Ask escrow what must be held until EDD issues its release.

Do not confuse employee plans with account paperwork

Deciding how employees join the buyer is a separate transition task. Communicate through an agreed plan, and have counsel review employment obligations without relying on the sale contract alone.

A buyer release does not make the seller free of every current or future obligation. Keep payroll records and the issued documents after closing.

Use the agency documents for the final check

The underlying sources are EDD Changes to Your Business and DE 3409A, Requirements for Obtaining Certificate of Release of Buyer When a Business Is Sold.

This is not tax or legal advice. Confirm final payroll deadlines, account status and release requirements with your CPA, payroll professional or attorney.

Keep the sale moving

• Compare the CDTFA clearance
• Plan the seller entity wrap up
• Use the full filing checklist
• Request your seller valuation

Use the valuation form to outline your sale, or call (408) 555-0179.