What Documents Do I Need in a Payroll Tax Audit?

What Documents Do I Need in a Payroll Tax Audit? What usually happens is that the auditor will send you a laundry list of documents? That they're looking for and of the different types of audits payroll tax audits are usually the ones that have the most flexibility because in a payroll tax audit they're basically reading for tests they're running a test on payroll that was paid taxable wages tax that was paying payroll tax expenses that are on the general ledger and then independent contractors that basically payroll tax in a box so if you're running an audit what they're gonna ask for is they're gonna ask for three years of records and they'll ask for tax returns and they're gonna ask for payroll tax returns and they're gonna ask for internal accounting and this that mail so before you go and tackle that big laundry list of documents the best thing to do is to talk to the auditor because at the beginning of the payroll tax audit you have the best opportunity to limit the scope of the documents requested and for some people providing payroll records for three years isn't that big a deal but for other companies particularly companies that utilize a large workforce or large amount of independent contractors it can be a huge deal to have to come up with all the 1099s and w-2s and everything that gets fired so the best opportunity you have with respect to documents is really limit the scope most EDD auditors will limit the scope of the records of their requested at least for the first audit meeting to here they last for three years of tax returns it may ask for three years bank statements but to limit the other documents to a year which is the best thing to do because if you can go through a limited testing period established that there's no error and the auditor has a chance to complete their process and check the box problem solved so when going through a payroll tax audit don't just accept the initial document request work with the auditors - it's actually needed so that you're not having over produce records and digging yourself into a big challenge that it's going to take you a lot of time to get out.


Sam Brotman, JD, LLM, MBA

Owner and Director of Legal
Brotman Law