california tax attorney

California Payroll Tax Audits and Payments to Officers

In addition to payments to employees either as casual labor or as reimbursements, the auditor is also going to look at any payments to officers or any personal expenses that are being written out of the business, and in an effort to classify personal expenses as taxable wages. Let's talk about that in a little bit of detail.
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California Payroll Tax Audits and Employee Reimbursements

One of the biggest problems that we come across in payroll audits is employee reimbursements and independent contractor reimbursements. A lot of the times what will happen is an employee will get paid a normal paycheck and then they will spend their own money outside the context of the business to buy materials, to buy supplies, go post office do whatever. The business will write the employee...
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EDD Independent Contractor Test

After verifying payroll and payroll tax withholdings, the EDD will next go through and verify all the workers that the business issued 1099s to. This is what is known as the EDD Independent Contractor Test. First, the EDD auditor will go through each 1099 worker in detail, one by one. Even 1099’s that were issued to businesses, landlords and others that are clearly not subject to payroll tax...
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EDD Audit Payroll Tax Verification Test

In addition to the payroll verification test, the EDD will also look at personal income tax withholdings and make sure that the amounts listed match what the state has on file as well. Just to go back and clarify, the EDD audit is going looking at the wages and the income that the people earned. The  EDD auditor is going through the payroll journal to make sure that the total wages is going to...
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EDD Audit Payroll Verification Test

Our last article, we discussed the purpose of the EDD audit initial interview questions. Those initial questions just kind of go through some of the background information on the business and help to explain that. After the initial interview, the EDD will conduct what they call a payroll test. The purpose of this article is to explain the payroll test and its function within the EDD audit.
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Independent Contractor Audit - Initial Interview Purpose

In our last article, we examined the questions that are asked in an independent contractor audit. In this article, we would like to examine the purpose behind those questions in a little more depth.
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EDD Independent Contractor Audit - Initial Compliance Interview

The first thing that happens in an EDD independent contractor audit is the initial compliance interview. The initial compliance interview serves a couple of different purposes. Number one, it is to get background information on the client. Number two, it is to get answers in place for different questions in case there is any problems or factual disputes that come up later. For example, one of...
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California Payroll Tax Audits and the General Ledger

During a payroll tax audit, the EDD is next going to go through the business’s general ledger in detail, the general ledger is important because the general ledger contains a record of all the payments the business made during the audit period in question. When the auditor goes through the general ledger, they are going to be looking for a couple of different things. Number one, is they're...
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California Payroll Tax Audits and Defending Independent Contractors

You may be familiar with or have heard of a twelve-factor test or a three-factor test or a lot of different tests that the EDD supposedly uses to classify independent contractors. Through my years of professional experience and time spent in a lot of California payroll tax audits, I will just tell you that a lot of this stuff is bogus. Audits of independent contractors essentially come down to...
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Sales Tax Mistakes to Be Aware of and How to Avoid Them

As a retailer or other seller of products, you have a lot of details to attend to but one of the most important, often most complex, is your sales and use tax obligations. Sometimes determining sales tax is like peeling an onion; just when you think you have found all the nuances, there is another layer to contend with. Non-payment of sales and use tax comes with stiff fines, potential jail...
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