Audit Representation
We have successfully represented clients before the IRS, FTB,
EDD, The California State Board of Equalization and other tax agencies.
Q. I have been notified
by the IRS that I have been selected for audit. Why was I selected?
A. The IRS has a number of things that drive audit selection.
The IRS has historically used a scoring system to evaluate an individual
tax return's "audit worthiness." However, the IRS has also instituted programs
where particular types of returns are selected for audit. Two of those
programs are the Industry Specialization Program and the Market Segment
Specialization Program. Under these programs, auditors are trained in specific
industry methods and practices. Because of the auditor's increased familiarity
with the market or industry, audits are more likely to generate additional
tax revenue because of the auditor's increased efficiency and proficiency.
Q. I have been notified by
the EDD that they would like to audit my employment records. What happens
in an EDD audit?
A. An Employment Development Department auditor will generally
look to see if you have been reporting all wages that have been paid, and
that payments for wages have been classified as such. A common occurrence
with many businesses is that they make payments to individuals without
designating what the payments were for. If no contrary documentation can
be found, the EDD will probably be inclined to classify the payments as
wages (and so payroll taxes will be due on those wages). When payments
to an individual are re-classified as wages, the EDD's tax assessment
can be reduced by showing the EDD that the employee paid income tax on
the payments made to him
