Why You Need A Good EDD Attorney
If you’re a business owner in California dealing with a payroll tax audit being conducted by the Employment Development Department, you may find yourself in need of legal services. It’s important to know about all the issues that come with this so you can get the best level of representation, so this article will deal with some of the basics of what an edd attorney does.
Under normal circumstances, an EDD audit begins with a former worker filing an unemployment claim.
But the EDD won’t deal with the individual merits of the case—instead, they’ll look at the status of all the independent contractors who have been hired by your company.
To help you deal with this, your edd attorney will request copies of the case file so the lawyer can construct the best possible defense against any possible mistakes, erroneous classifications, taxes and penalties.
This kind of audit also comes with extensive correspondence from the EDD. This will include notification of the audit along with requests for documentation, and this includes a questionnaire to be filled out before the audit.
It’s absolutely essential that the responses to this questionnaire be carefully planned out in advance, in coordination with a comprehensive legal strategy.
Many of these questions may seem basic, but they often go to the heart of the audit, so it’s important to let the EDD help with these answers.
Your edd attorney should also have a specific background in tax-related issues. Ideally this lawyer should be a CPA and a tax attorney—the higher the level of expertise, the better the strategy is likely to be.
The implications of the outcome are serious. If the EDD auditor decides that contractors should be classified as employees, there may be penalties associated with withholding income tax or a failure to deal with insurance issues. The demand for payment is usually immediate, within 30 days. If this penalty can’t be made, a ten percent penalty pay be attached, and the IRS may agree with the conclusions of the audit and attach its own past due amounts with that same 30-day period.
These penalties can actually be larger than the amount of taxes owed, so its important that your edd attorney have the ability to deal with the EDD and argue against these penalties.
There are a number of factors associated with this determination, and a good edd attorney will know how most or all of them work. That’s why it’s important to get a highly-qualified edd attorney to get the best possible outcome.