ASK THE EDD ATTORNEY: What documents will the EDD auditor likely ask me to produce for my audit?
by Robert S. Schriebman
When the EDD initially contacts a perspective employer who is about to be audited, the EDD will send its standard preprinted document request. This request is divided into two broad categories: minimum required records and additional records required for verification of acknowledged payroll. The request is very broad and frankly lists categories of documentation that are not required to be produced. For example, IRS quarterly and annual payroll tax returns.
Whenever I get a new client undergoing an EDD audit the first concerns go to the documentation really necessary for the upcoming audit. Even EDD auditors are uncertain as to what documents they can and can not legally demand.
Recently a new client came in for a consultation. He was undergoing an audit, and things were not going well for him. The EDD auditor felt that he was not cooperative in producing necessary documents during the audit and was about to issue a huge assessment based upon estimation. I contacted the auditor and asked a simple question, “What documents do you really need to complete your audit?” In response to my questions the auditor sent me an email listing the documentation that she felt was necessary for her to complete the audit. She sent me a list that I now pass on to you.
The following is a list of documents that you will need to produce for your upcoming EDD audit. These are the key critical documents necessary and required by the EDD:
- 1099-MISC forms for the past three years.
- California corporate income tax returns for the past three years.
- General ledgers for the past three years.
- W-2s and W-4s issued for the past three years.
- City business license.
- A sample copy of any independent contractor agreement used in your business to hire independent contractors.
- If you are a general contractor, a copy of your CSCLB license.
- Sample invoices submitted to you by independent contractors.
- You may have to produce copies of some canceled checks, but these checks must be both relevant and limited.
If you are incorporated the EDD may want to look at your corporate minute book to make sure that you have kept annual minutes and have Articles of Incorporation in good standing.
We are beginning to see investigations by both the EDD and IRS into the legal status of the corporation – is it in good standing with the Franchise Tax Board or has the corporation been suspended for the failure to file returns and to pay the minimum franchise tax. We will be writing articles about this very important new tactic.
©Robert Schriebman 2013.
An EDD attorney, Robert Schriebman has a successful practice in the Rolling Hills Estates area of Los Angles County serving clients throughout California and the United States. As a trusted EDD lawyer, Robert Schriebman has successfully dedicated more than 30 years to helping individual taxpayers, business owners, CPAs, Enrolled Agents, and tax attorneys navigate the complicated tax systems of the federal and state governments.
Robert Schriebman has written over 20 books including the major manual used nationally by practitioners and the IRS, “IRS Tax Collection Procedures – A Manual for Practitioners” published by Commerce Clearing House in addition to the only 2 books ever published dealing with how California Employment Development Department (EDD) operates. See “California Tax Collection Practice and Procedures” and “California Taxation Practice and Procedure”, both published by Commerce Clearing House.