Successfully Navigating Employment Tax Audits

April 18th, 2016 - Bryan L. Page

The mere thought of an audit by the government can send shivers down the spine of business owners. In Washington, a number of different agencies can conduct audits, including the Department of Labor and Industries and the Employment Security Department. These agencies are tasked with collecting employment taxes related to our state’s workers compensation and unemployment systems.

The audits by these agencies look into whether a business has paid all employment taxes that it owes. These audits can be scary for businesses, given the mystery surrounding these audits and the complex laws and regulations these agencies enforce. But there are a few tips businesses can follow to make an audit go more smoothly.


Perhaps the most important thing to do is cooperate with the auditors. If they ask questions, answer them as best you can. If they request documents or other records, provide those as quickly as you can. Be friendly. Do not obstruct the audit process, or even appear to be obstructing. Keeping on good terms with the auditors can be very helpful if the audit results in negative findings. The agency’s staff will be more willing to work out a settlement with a cooperative business.

Read Everything.

Open all letters and other communication received from the agencies. And read it all very carefully. Pay close attention to any deadlines. If an audit results in additional taxes owed, businesses have a right to appeal. But appeals must be filed by a particular deadline. If that deadline is missed, the right to appeal is forfeited. So it is very important to calendar all deadlines and comply with those deadlines.

Seek Help Early.

If the auditors have questions you cannot answer, it can be a good idea to seek help from your accountant or bookkeeper. This person is likely to know where information is kept, and may even have experience with audits that can be useful in getting the auditors what they need. This help should be requested early on in the audit process. If you get audited, let your accountant know and ask if they can help. If you want to appeal the results of an audit, contact an attorney as soon as possible. It can take some time to review the audit results and identify what issues to appeal. And you do not want to miss the appeal deadline.

Following these simple tips can help a business successfully navigate an employment tax audit.

Disclaimer: This article and blog are intended to inform the reader of general legal principles applicable to the subject area. They are not intended to provide legal advice regarding specific problems or circumstances. Readers should consult with competent counsel with regard to specific situations.

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