“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

AUDIT

“WHY US?”

Random audits

Benefit related audits

External information

Task force

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)

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 register

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)

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 plans

MISCLASSIFICATION OF WORKERS

Section 212!!!

Unemployment law and Federal law are different

Our definition of an “independent contractor” is very specific

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)

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 fact

PART B

Must be done outside the usual course of the business

OR

Outside of all the places of business

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!

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 protest

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 court

PROTECTION

Stay informed: Google IDES and section 212 every now and then

Self examine: you have our exact method

Keep contractor files with evidence!!!