The Employment Development Department (EDD) has the authority to conduct audits for two main purposes. The first purpose is promoting voluntary compliance. The other is verifying that employers remain compliant with the laws and regulations the EDD has legislated.
However, you should know two different classifications of audits: verification and request. That’s why we have created this outline to briefly describe the differences between verification and request EDD audits.
Verification audits occur on a completely random basis of selected employers or via other types of selection criteria. A variety of selection criteria can determine whether the EDD will select an employer. These criteria can include the type of industry, payroll size, amount of workers, location, and liability. Keep in mind that your verification audit can be due to one of these reasons or a combination of them.
The main difference between verification and a request EDD audit is that a request audit is not random. These types of audits occur due to an identified reason to verify that a specific employer is compliant with EDD legislation. These identified reasons usually concern verifying a benefit, status, or delinquency assignment. The EDD auditor’s role in these cases is to ensure your business is reporting its payroll properly and accurately.
Work With an Attorney
If you’re the subject of verification or request audit, you might feel stressed. Tax audits usually result in hefty fines ranging from thousands to hundreds of thousands of dollars your business must pay. Plus, upon receiving the audit, you only have a short time frame in which you can contest it.
That’s why you should work with a payroll tax attorney who can help you reduce those assessments. At Pershing Square Law, we have a 100-percent success rate in reducing payroll tax audits for our clients who acted in a timely manner. Contact us today for the help you need.