How Much Is it Going to Cost for Me to Retain Brotman Law in My EDD Payroll Tax Audit?

Well it depends, so let me give you some of the factors that drive cost. In a payroll tax audit, the actual preparation process isn't usually that intensive because a lot of the documents are kind of run-of-the-mill and most companies are not usually having problems with either the payroll test or the payroll tax tests that come in an audit. The biggest driver of cost is if you have problems with the other two tests. So it's either the independent contractor misclassification issue or is the payments that should have been reclassified as taxable wages. If you're having an issue with those two categories, then a lot of the work that we're doing on our end as tax attorneys is mitigating that problem and the size of the hole that's been dug impacts how much digging we're going to have to do to fill it. So from a cost perspective, it varies based on the size of the problem that we're crossing and it also varies based on the size of the fight that we're dealing with the auditor. As you can imagine, like most organizations, some people in the EDD are nice, some people are friendly, some are helpful, others are not. So we don't really have any control over the auditor and if the auditor turns out to be a not very nice person, that's obviously going to factor in the cost because there's a lot of time we've just been fighting it. With that said most EDD audits at our firm are anywhere from about $5,000 to $7,500 in cost and keep in mind a lot of that cost is determined by who's working on the matter. So a lot of times, we have a very good senior paralegal who is able to work with clients and do a lot of the initial prep work and then we have one of the attorneys come in and just knock the thing out of the park. Those are great because we're able to really mitigate cost. For more serious issues we involve the senior attorneys at the beginning. There's a much more strategic approach to dealing with it and obviously when you get somebody with a higher level of experience, it just tends to drive cost. So we take the philosophy in our firm to try and be as efficient as possible and the nice thing about us is we do so many EDD audits that our whole team is kind of on board for what we're going to do but you know we're not going to send a paralegal to go represent you in an EDD audit. So we're going to send an attorney but there's a lot of things that we can kind of do so that gives you a good range for what's involved. It's generally 1015 hours of time in the course the audit. Obviously if things go south that's going to drive cost. Obviously if we have problems with documents that's going to drive cost but that'll give you a general sense for what you're looking at to have a representative retained in a matter.


Sam Brotman, JD, LLM, MBA

Owner and Director of Legal
Brotman Law