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EDD Audit Payroll Tax Verification Test

April 23, 2026January 3, 2018 by Brotman Law

Key Takeaways

Topic: 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 a….
Just to go back and clarify, the EDD audit is going looking at the wages and the income that the people earned.

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 match. Now, this article discusses going through and doing a personal income tax withholding test.

EDD Audit Payroll Verification Test

April 23, 2026January 3, 2018 by Brotman Law

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.

Key Takeaways

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.
A payroll test is a verification of the business's payroll posting system. The EDD auditor is making sure that payroll is being reported by the business accurately and properly.
What the EDD auditor will do in an independent contractor audit is request payroll records as a part of the initial document request you receive from the state of California.

Independent Contractor Audit – Initial Interview Purpose

April 23, 2026January 3, 2018 by Brotman Law

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.

Key Takeaways

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.
The auditor’s first goal in an independent contractor audit is establishing a system and a pattern of routine for the business’s operations.
The auditor here is establishing a pattern of who the business's workers are that function as employees. The reason the auditor doing that obviously is to compare the employees to any independent contractors that the business may have.

EDD Independent Contractor Audit – Initial Compliance Interview

April 23, 2026January 3, 2018 by Brotman Law

Key Takeaways

Topic: 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.

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 the questions they ask you is “How many locations do you have?”. That way if they later get information on a location that you did not disclose, you could potentially dig yourself into trouble.

California Payroll Tax Audits and the General Ledger

April 23, 2026January 3, 2018 by Brotman Law

Key Takeaways

Topic: California Payroll Tax Audits and the General Ledger
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 going to be looking for payments to people.

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 going to be looking for payments to people. The auditor is looking for payments to people who may or may not have been a 1099 and they are going to be looking for payments to the business’s employees and toward 1099 contractors that were not listed on the W2 or the 1099 for whatever reason.

Sales Tax Mistakes to Be Aware of and How to Avoid Them

April 23, 2026May 3, 2017 by Brotman Law

Taxes Concept On File Label In Multicolor Card Index. Closeup View. Selective Focus.Octet Stream

Key Takeaways

Let’s start with this one because it is not something sellers commonly see.
Whether or not a buyer is allowed tax-free status is up to you to find out. You must make certain the buyer has a legal exemption; otherwise, you could be found liable for uncollected sales tax (see jail time above).
Did you know there are over 11,000 sales tax jurisdictions in the US? Not only that, but changes occur annually.

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 time, and repayment requirements. Avoiding all that is essential to both your business and your well-being.

What to Do If You Miss the Tax Filing Deadline

April 23, 2026April 26, 2017 by Brotman Law

What To Do If You Missed The Tax Deadline

Key Takeaways

If you are expecting a refund, you don’t sweat it because you do not get penalized for not filing in this case. You won’t get your refund until you do file, but otherwise, the IRS is not going to come after you for your paperwork.
If your income was $58,000 or less, you can use the free version of a brand-name income tax software to prepare your return. If you earned over that amount and feel comfortable preparing your own return, you can use the IRS Free File Forms.
In both cases, you can use IRS Free File to file your return electronically. IRS E-file is available until October 18 for filing your 2016 income taxes.

Uh oh. It is now after April 18^th, and you did not file your taxes. What do you do?

If you are expecting a refund, you don’t sweat it because you do not get penalized for not filing in this case. You won’t get your refund until you do file, but otherwise, the IRS is not going to come after you for your paperwork. (If you wait until after April 18, 2020, though, the IRS keeps your refund, so you better get on it.)

What Sales Are Subject to Sales Tax?

April 23, 2026April 19, 2017 by Brotman Law

Midsection Of Saleswoman Holding Credit Card While Using ETR Machine At Boutique Counter

Key Takeaways

A district can be an entire county or part of a municipality. District taxes are approved by the local voters and are used for special services, such as libraries, or general services. Sales and use taxes go into the state’s general fund.
Use tax is typically collected by the retailer at the time of sale, but it is imposed on items for use in California but purchased outside of the state.
The seller is responsible for paying the correct amount of tax to the BOE and almost always collects it from the purchaser.

Nearly all states in the U.S. charge sales tax on items sold, California is no different in that regard. Sales taxes go into the general fund to help pay for education, health care, public pensions, and other programs. Sales taxes can also be collected for special programs or specific areas of the state.

Common Tax Filing Mistakes and How to Avoid Them

April 23, 2026April 13, 2017 by Brotman Law

It is time once again for that annual rite of passage for every taxpayer: getting the tax return and payment to the IRS on time.

If you have already filed and paid your taxes, you are to be congratulated. Hopefully, you have not made mistakes or, if you have, then your early filing may give you a cushion for correcting them before the tax deadline.

How a Tax Attorney Can Help With Your Income Taxes

April 23, 2026April 6, 2017 by Brotman Law

Most of the time, taxpayers can handle personal income taxes without too much trouble but there are times when a tax attorney can be either a handy resource or a required partner. Both the IRS and the California Franchise Tax Board (FTB) can get quite aggressive when the rules are not followed, even when taxpayers are doing their best.