For some businesses that rely heavily on contract labor, the threat of an IRS or Employment Development Department audit is serious and can be potentially crippling to a business. Because of the amounts in controversy, liabilities at the end of payroll tax or independent contractor audits can be in the hundreds of thousands if not millions depending on the size of the business. For the taxation agency revenue agents, often these inquiries will span multiple years and investigations are conducted with the goal in mind of generating revenue for the federal government or the state. In addition, the penalties associated with these matters can be significant.
Determining payroll tax liability and whether a worker is an independent contractor or an employee is a multi-faceted inquiry. Luckily, Brotman Law understands the subtleties involved in the analysis and will work to present the facts in the light that is most favorable to the client. Our knowledge of the law and of the federal/state audit procedure gives us the upper hand in the majority of cases with the tax agencies. We often know the direction of their investigation before they take action, which allows us to plan better and to navigate our clients through the audit process with as much ease and simplicity as possible.