How long does an EDD audit last?
If EDD selects your company for an audit of your contractors, you can expect the audit to last between 3 months and 9 months.
The purpose of an EDD audit
The purpose of an EDD audit is to determine if your workers are really employees and the audit starts when you receive a letter titled “Inquiry Regarding Records” that includes a “Pre-audit Questionnaire.”
Why does the audit take so long?
EDD requests a lot of records including your federal income tax return, W2s, payroll returns, 1099s, and your company’s financials.
EDD will also interview your contractors to compare the facts you provide with the information given by your contractors.
The more independent contractors you have hired during the audit period, the more time it will take EDD to complete its investigation.
How far back can EDD audit you?
Generally, EDD audits cover a 3-year period (12 payroll periods or quarters). However, if EDD discovers you have workers who you did not report on payroll or provide a 1099, (for instance you paid them in cash and have no records or poor records of the payments), EDD can expand the audit to 8 years.