COVID-19 has caused many companies to reconsider how they run their day-to-day business. This could mean cutting costs in various different ways. One way that businesses can cut costs is through the EDD Workshare Program.
This program allows a business to pay their workers, who have had to reduce their hours due to COVID-19. They pay their workers with a prorated percentage of Unemployment Insurance benefits. This seems like a beneficial program for any company that would like to avoid layoffs and maintain the same workforce who are trained and will be ready to work once they can.
But applying to the Workshare Program might result in an EDD audit. The California EDD audits to ensure that companies are adhering to California’s payroll tax laws, and are collecting payroll taxes from their employees. The taxes the employer is responsible for paying, include unemployment insurance and employment training tax.
The EDD conducts audits to check if the employer was fully paid the taxes they owe under California law. Because the Workshare Program utilizes the Unemployment Insurance payments, the EDD must ensure that the company has paid the taxes they owe.
In a case where your company is applying for the Workshare Program, the EDD would likely conduct an audit as a verification audit. This audit would allow the EDD to confirm that you have obliged to the California tax law.
If you are facing an EDD audit, our best advice is to consult a tax lawyer. We at Milikowsky tax law, can help! Contact us to see the best way to prepare for an EDD Audit.