The California Employment Development Department (EDD) conducts audits to determine if businesses are: Correctly classifying their contractors and employees, and Paying the full taxes due under California law It’s important to note that EDD is actively targeting independent contractor misclassification, which could result in a six-figure penalty per employee for… [Read more]
CSLB Site Sweeps and EDD Audits
CSLB site sweeps and EDD audits can cost business owners delays, fines, stop-work orders and even potential jail time. In 2019 and 2020, CSLB’s Statewide Investigative Fraud Team (SWIFT) responded to 855 leads, conducted 52 sting operations and 216 sweep days. These efforts led to the issuance of 260 Notices… [Read more]
What to expect in an EDD Audit?
If your business is experiencing an EDD audit, it’s important to know what to expect. Founder and managing attorney at Milikowsky Tax Law, John Milikowsky, breaks down the EDD audit process and the frequently asked questions that come with an EDD audit. “What you can expect from us, whether you… [Read more]
The Difference Between EDD and CSLB Audits
Employment Development Department (EDD) and California Contractors State License Board (CSLB) audits both expose your business to fines and penalties if the agency finds you noncompliant with the strict regulations and policies they have in place for classifying 1099 independent contractors. Both CSLB and EDD perform site sweeps that can… [Read more]
Recent Construction Site Sweeps Explained
General contractors who hire unlicensed workers and unlicensed subcontractors put themselves at risk for potential criminal action by the local District Attorney (DA) and they risk receiving a stop work order from California Contractor State Licensing Board (CSLB) if and when that agency performs a site sweep. A site… [Read more]
Right of Control: Who has it and How Does EDD Determine 1099 Status?
When determining whether your workers should be classified as employees or independent contractors, it’s critical to ensure that you are closely following the Employment Development Department’s (EDD) strict guidelines. On the simplest level, proper classification is determined by whether or not the principal, or employer, holds the “right of control.”… [Read more]
Can an EDD Audit Turn into a Criminal Investigation?
In short, yes. If you are paying workers who are not reported on a 1099 or W2 (for instance you are paying workers in cash and have no record of their payroll or payments), EDD may assess a fraud penalty and could open a criminal investigation. If your contractors are… [Read more]
Case Study: EDD Audit Construction
When The California Employment Development Department, EDD did a site sweep, Ryan Brown found himself facing an audit. As he did research on his own as to what the ramifications of an EDD audit might be, he saw steep fines, jail time and high conviction rates reported time and time… [Read more]
How to resolve an IRS tax balance
4 Consequences of Unpaid Business Taxes
Millions of dollars in penalties are doled out by the Internal Revenue Service (IRS) each year. With the majority of which are attributed to businesses that failed to file taxes or pay payroll taxes. It’s important to understand compliance to ensure your company steers clear of costly violations. There are… [Read more]