Facing an Employment Development Department (EDD) audit can be a nerve-wracking experience for both the taxpayer and San Francisco business owner. The audit process involves a thorough look of your financial records, tax payments and employee records. So when the EDD audit is complete and you’ve successfully won your argument, it can feel like a weight is lifted off your shoulders. That being said, there are steps you should take once the audit has concluded. Here’s a look at what happens and the steps you should take after winning an EDD audit.
Review the audit findings. Before you put the audit entirely behind you, it’s important to review the audit findings in detail. With your experienced tax attorney, carefully go through the report provided by the EDD auditor to understand their conclusions, any issues they identified and the reasons for their decision. This information can be valuable in ensuring that you maintain compliance going forward.
Maintain ongoing compliance. Winning the audit does not mean you can relax your efforts to remain compliant with the EDD and state tax regulations. Use the information that you learned from the audit findings to strengthen your compliance processes and prevent similar issues from arising in the future. Work with a tax or business attorney to review your payroll and tax procedures to ensure ongoing accuracy and compliance.
Keep documentation. Documentation is your best friend during an EDD audit. Make sure to stay diligent in keeping records of the audit process, including correspondence with auditors, copies of all relevant documents, and any changes you made to your processes as a result of the audit. This documentation can be valuable should you face another audit in the future.
Educate your team. Make sure your human resources and financial teams are aware of the audit’s findings and the steps taken to address any issues. Work with those individuals to ensure procedures are updated and records are being kept in order to stay vigilant to ensure ongoing compliance.
Consult with professionals. It’s always best to work with legal and financial professionals to ensure you’re on the right track post-audit. An experienced tax attorney can offer strategies for preventing future audits and help you navigate any issues that may have arisen during the audit process.
If you face another audit down the road, the lessons learned from your previous experience can be invaluable in preparing for and navigating the process. Don’t rest on your winning audit laurels. The best thing you can do to protect your business and prevent a possible audit is to speak to a San Francisco tax attorney with experience in EDD audits.
Allison Soares is a partner and tax attorney at Vanst Law. It doesn’t matter the issue: audits, collections, appeals, international disclosures, grumpy people— Allison enjoys fixing problems. In addition to her legal work, she has worked in accounting and utilizes that knowledge to her advantage while handling cases involving EDD audits.
