What Does the EDD Payroll Tax Audit Process Look Like? So the payroll tax audit process is pretty straightforward the first thing that happens is that you're contacted and notified that you've been selected for audit and the EDD will ask you to fill out a questionnaire once you fill out that questionnaire then you're usually assigned to an auditor after that questionnaire is filled out upon the assignment to the auditor the auditor will call you or call your representative and schedule a date for the audit meeting at that point that's also a very good time to go through the auditors document request which is a pretty standard document request and see if you can limit the testing period to one year that will reduce the amount of documents that you have to provide and it will also make the audit process go a lot smoother at the first meeting with the auditor what you're going to be doing is you're going to be doing four things number one you're gonna be reviewing the taxable wages that were paid number two you're going to review. The tax that was paid number three you're going to be looking for payments on the general ledger or other payments that were made that potentially should have been subject to payroll tax and number four you're going to be looking at the classification of any outside workers or any independent contractors so that's what you're going to be running through when we take on a client we always like to pre audit them before that process goes so that we know exactly or in a reasonable degree of certainty exactly how things are going to fall so we go into the audit and we're very well prepared and we can walk through that sequence assuming the sequence goes correctly the auditor will review the information come to a determination usually within a few weeks or a couple months time and then send the results if not then the auditor will will issue a supplemental document request they'll ask for more information and they'll continue to work the case file while the EDD is going through and formulating their results and they're also reaching out to third parties they're reaching out to any independent contractors and there reaching out to any outside vendors and so this gets to the point where the auditor is issuing an audit report.