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Tips Before Engaging in an EDD Audit in 2024

Facing an Employment Development Department (EDD) audit can be challenging for any business owner. With the complexities of tax laws and the potential financial implications at stake, it’s crucial to be well-prepared before entering into such an audit. As we step into 2024, navigating the EDD audit process requires careful consideration and strategic planning.

John Milikowsky of Milikowsky Tax Law discusses the challenges businesses face when confronted with an EDD audit.

1. Understand the Scope

Before diving into an EDD audit, it’s essential to understand the scope of the examination. Familiarize yourself with the specific issues under review and gather all relevant documentation pertaining to payroll, employment classifications, and tax filings. Having a clear understanding of what the audit will entail sets the stage for a more focused and efficient process.

2. Review Internal Processes

Take the time to review your internal processes and procedures related to payroll and employment practices. Ensure that your records are accurate, up-to-date, and compliant with state regulations. Address any discrepancies or potential red flags proactively to mitigate risks during the audit.

3. Seek Professional Guidance

Navigating an EDD audit alone can be challenging, especially given the intricacies of tax law and regulatory compliance. Consider seeking professional guidance from a seasoned tax attorney like John Milikowsky. An experienced attorney can provide invaluable insights, represent your interests during the audit, and help you navigate complex legal issues with confidence.

4. Maintain Open Communication

Communication is key when dealing with EDD auditors. Establish open lines of communication from the outset and be responsive to inquiries or requests for information. Transparency and cooperation can help build rapport with auditors and demonstrate your commitment to compliance.

5. Prepare for Interviews

Be prepared for interviews with EDD auditors by thoroughly reviewing your records and documentation beforehand. Anticipate potential questions and ensure that you can provide clear and concise responses supported by evidence. Presenting a well-organized and comprehensive case can strengthen your position and facilitate a smoother audit process.

6. Document Everything

Documenting every aspect of your interactions with EDD auditors is essential for maintaining a clear record of proceedings. Keep detailed notes of meetings, phone calls, and correspondence, including dates, times, and key discussion points. This documentation can serve as valuable evidence in the event of disputes or appeals.

7. Stay Informed

Stay informed about changes to tax laws, regulations, and audit procedures that may impact your business. Regularly consult trusted sources of information, such as tax attorneys, industry associations, and government websites, to stay abreast of developments relevant to your situation.

In conclusion, preparing for an EDD audit requires careful planning, attention to detail, and strategic foresight. By understanding the scope of the audit, reviewing internal processes, seeking professional guidance, maintaining open communication, preparing for interviews, documenting everything, and staying informed, you can navigate the audit process with confidence and achieve a favorable outcome.

Facing an EDD Audit? Our Southern California Tax Attorneys Are Here to Assist.

In summary, if your business is undergoing an EDD audit, our tax attorneys can provide expert guidance in dealing with the Employment Development Department. 

To learn what to expect in a California EDD audit, read our article, here.