How to survive an unemployment tax audit Why us Random audits Benefit related audits External information Task force The process Section 1800 average business might take a full day ID: 647383
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“Out of all the things in the world that we don’t have time for right now…I didn’t even know they did audits…why us, why now…wonder how much that will cost…I hate auditors…better call the boss…who turned us in…wonder if we can reschedule that appointment…”
How to survive an unemployment tax auditSlide2
“Why us?”
Random audits
Benefit related audits
External information
Task force Slide3
The process
Section 1800
average business might take a full day
(maybe some follow-up)
one person is coming with a laptop
(they will need a place to work)Slide4
What will we look at?
Almost everything on the payables side:
We will reconcile all of your payroll with our records
We will look at your general ledger and check registerSlide5
We will pay special attention to your 1099s
misc
and other records of contract labor
We will examine your income tax filing records
And anything else that might have pertinent information
(not so much involved with earnings and revenue)
Slide6
Payroll issues
Make sure names and SSNs are correct
Verify your excess wage calculations
Verify correct additions and subtractions from wages:
medical insurance, 401K, cafeteria plansSlide7
Misclassification of workers
Section 212!!!
Unemployment law and Federal law are different
Our definition of an “independent contractor” is very specificSlide8
To consider a worker an independent contractor you must meet 3 conditions all at the same time
(and the language in any contract does not control the situation)Slide9
Part a
The work must be done free from direction and control
there are a variety of factors
must be true both under the contract of services and in factSlide10
Part b
Must be done outside the usual course of the business
OR
Outside of all the places of businessSlide11
Part c
The individual in question must be engaged in an independently established trade, occupation, profession or business (related to the services being performed)
The burden of proof is on the employer!Slide12
You owe money! ? ##@**@#!!!
You get 10 days to present more evidence
You will receive a Determination and Assessment
This is the
protestable
document
you get 20 days to file a protestSlide13
The protest
First level is a phone hearing with an administrative law judge
Second level is filing objections to the decision
Third level is your county circuit courtSlide14
Protection
Stay informed: Google IDES and section 212 every now and then
Self examine: you have our exact method
Keep contractor files with
evidence!!!