Free Consultation: 858.450.1040 Payment | Client Login

MENUMENU
  • EDD
  • IRS
    • IRS Notices – What They Mean
  • ABOUT US
    • PRACTICE AREAS
    • CONTACT US
  • TAX LAW & EDD RESOURCES
    • EDD & IRS AUDITS
    • CRIMINAL TAX
    • SAN DIEGO TAX ATTORNEY
    • Orange County Tax Attorney Services
    • TAX BALANCE
    • INNOCENT SPOUSE RELIEF
    • OTHER TAX LAW MATTERS
    • SALES TAX AUDITS
    • UNFILED TAX RETURNS
    • OFFERS IN COMPROMISE
    • CALIFORNIA INCOME TAXES
    • INTERNATIONAL TAX
    • TAX COLLECTIONS
    • CORPORATE | BUSINESS TAX
    • PAYROLL TAX AUDITS
    • TAX LEIN
    • FAQs
  • SBA Loan Resources
    • SBA Criminal Defense
    • SBA PPP Assessment
    • FAQs
  • RESOURCES
    • Blog
    • VIDEO LIBRARY
Home > Blog > How to respond to an EDD Audit Letter or Site Visit

How to respond to an EDD Audit Letter or Site Visit

September 1, 2020

The California Employment Development Department EDD performs audits to detect and deter fraud involving employment law, including, but not limited to employment misclassification, payroll tax evasion and employment tax. If your company has received a letter initiating an investigation into your employment practices, be aware that providing EDD with the wrong information can expand your audit and lead to civil and even criminal referral as well as referrals to IRS civil and criminal departments.  

If you have received a letter, or site visit, from CA EDD, here is the process you can expect. 

The Process of an EDD Audit

Before you contact EDD and address your audit, collect all relevant records from the previous three years including: (but not limited to):

  • check registers
  • canceled checks 
  • bank statements and annual financial statements 
  • federal and state income tax returns and employment tax reports 
  • payroll records 
  • W-2 and 1099 Forms 
  • ownership verification 

Pre Audit

Gather records and statements relevant to the audit. Being prepared and organized will help you avoid unnecessary fines and penalties. Regardless of the level of simplicity you feel you are facing, do not volunteer extra information to your investigator.  If the penalties you are facing exceed $5,000, reach out to a skilled EDD attorney immediately.  An EDD attorney will  review your records and ensure that the message EDD gets is supported, researched, consistent with what they expect to hear and does not expand your audit beyond the bounds of the original review. 

During Audit 

During your EDD audit, an auditor will first conduct an entrance interview, where they  will explain the purpose of the audit and outline its proceedings. You can ask the auditor general questions as they examine your employee classifications, wage and hour records, and your bank statements.. 

After the audit is complete, the auditor will present their conclusions (known as a proposed notice of assessment, or PNA) with you, which you have a right to contest if you do not agree. You might have made overpayments, in which case you may receive either a refund or credit for next year. You might have made underpayments, in which case you may face a penalty. Or, you may have committed infractions resulting in back-payments, fines and other penalties. EDD has the authority to issue fines whether you transgressed intentionally or unintentionally. 

Post Audit

Once your PNA is complete, EDD will share information with IRS, who may or may not choose to perform additional audits or investigations.

If your business finds itself in an EDD audit, reach out to us.  Our team of experienced EDD and IRS attorneys can review your situation and assess whether your situation is best handled on your own or with our help. We have defended over 300 businesses in government audits and we’re here to help. 

Filed Under: Blog, COVID-19 Tagged With: Audit, Business Owners, California Taxes, Corporate Tax Compliance, Filing taxes, International Law, International Tax, IRS, IRS Audit, Small business, Tax Attorney, Tax Preparation, Tax Season, taxes

Archives

Questions About
Tax Audit/Controversies?

A representative will be in contact within 1 business day
PRIVACY POLICY

Get Monthly Updates on Important Tax Law Matters



FOLLOW US ON:

Milikowsky Tax Law is located at: 4250 Executive Square, Ste. 650, La Jolla, CA 92037
o. (858) 450-1040 | m. (858) 212-0542 |
Privacy Policy

DISCLAIMER:
The information on this website is for general information purposes only. Nothing on this site should be taken as legal advice for any individual case or situation. This information is not intended to create, and receipt or viewing does not constitute, an attorney-client relationship.

Milikowsky Tax Law © All Rights Reserved. Clear1099.com | Cal1099.com | California1099.com © All Rights Reserved.

This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Cookie settingsACCEPT
Privacy & Cookies Policy

Privacy Overview

This website uses cookies to improve your experience while you navigate through the website. Out of these cookies, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may have an effect on your browsing experience.
Necessary
Always Enabled

Necessary cookies are absolutely essential for the website to function properly. This category only includes cookies that ensures basic functionalities and security features of the website. These cookies do not store any personal information.

Non-necessary

Any cookies that may not be particularly necessary for the website to function and is used specifically to collect user personal data via analytics, ads, other embedded contents are termed as non-necessary cookies. It is mandatory to procure user consent prior to running these cookies on your website.

SAVE & ACCEPT