nIf you are an employer in California, you are well aware of the Employment Development Department, or the EDD. This agency is one of the largest state departments and is responsible for administering the collection, accounting and enforcement process of the state’s employment taxes.
Some believe that the EDD is more aggressive in their efforts than the IRS. The Auditors start the interaction with employers taking the position that the employer is out of compliance and their ultimate goal is to discover every item and then collect fines, interest, penalties and back taxes. Therefore, when you discover that your business may be subject to an Audit, how you handle your communication is VERY important.
It is entirely possible to represent yourself through the process, but just be prepared to be very organized, succinct and clear in your communications. Much like a Miranda warning at arrest, “Anything you say can and will be used against you!“
You should expect the Audit process to last anywhere from several months to two years before resolution. Any semantic confusion, miscommunication, subjective interpretation or production of a irrelevant document could result in an unfair assessment.
Your safest path is to hire an attorney or other tax professional right away. However if you choose to fight the storm yourself, the following graphic highlights some tips.