Being audited by EDD can happen to anyone. It can be challenging to take a step back and see the audit process from an objective point of view, but maintaining your focus is essential to coming out ahead in the end. In this article, we discuss tips to simplify the process, as well as ways to avoid making mistakes throughout the experience.
Read over the initial audit documents very carefully.
Determine if there is a deadline set by EDD to respond to the initial audit notices. Carefully review the pre-audit questionnaire to determine if there is any information that you believe may hurt you if disclosed. You must be truthful and honest with the information and documentation that you provide to EDD.
If the documentation you received requires you to call and make an appointment, respond immediately. If you need more time to prepare or you wish to seek professional advice, let the appointment secretary know what you want to do. One of the most important things in any audit is timely communication.
Review EDD “Employer’s Bill of Rights.”
You may obtain a copy of this document by going to EDD web site. It is also known as EDD Form DE195. While most of the “rights” concern the post-assessment process of an EDD assessed deficiency, there is one fundamental right concerning courteous and timely service.
EDD has interpreted this provision to allow a taxpayer the right to seek independent professional advice. Even if you have a set appointment for your EDD audit, you have a right to postpone this appointment while you seek the advice of one or more professional practitioners.
Review EDD’s Document Request.
This document request is Form DE231TA — a standard form included in the initial audit package. EDD may ask for documentation that you are under no obligation to give them, such as IRS tax returns.
They often ask for documentation that they already have, especially under the category “State Employment Tax Reports.” EDD wants you to provide these documents because it takes them longer to get them internally.
Documents such as check registers, canceled checks, and bank statements are information and documentation that is irrelevant for many EDD audits.
At the top of the Document Request form, there are dates showing the period of examination; for example, 10/01/2010-09/30/2013. When you assemble your documentation and information, pay particular attention to the audit period. Do not give EDD records before 10/1/2010, or records beyond 9/30/2013. You may open yourself up for a more extensive audit with a potentially larger assessment.
See a professional tax advisor before you meet with EDD, give any documents to EDD, or make any statement that will be used against you.
A consultation with a professional may mean the difference between audit success and a potential economic disaster. EDD laws are complicated, and they are often issues of tax procedure that you need to know to protect yourself. Make the investment – it is worth it! You can contact the Milikowsky Tax Law office to set up an appointment today.
