Virginia Preparers

[TAX4US]

TP just received a notice from VA State uemployment to do a 2 year audit on his S Corp. I am trying to help. Any suggestions on 1; what are they looking for and 2: what do we need to show them? Anybody been through this type of audit? Thanks

[S T]

Well, no one is posting, so I will provide the best I have as I participate in these audits for California and NC

Based on your post, it is a payroll audit and they will be looking for payroll reports submitted subject to the VA unemployment regulations.

You will probably need to provide time sheets or record keeping of Employee hours, Payroll Summary Reports, copies of the Payroll UI reports submitted along with payments.

As with other agencies reporting required on payroll taxes, VA UI will probably be looking for those "casual labor, temporary help, etc" that maybe should be an employee category, but not reported as such. So maybe also a record of such.

I am sure you have already looked, the VA site to the quarterly reports is at http://www.vec.virginia.gov/employers/tax-registration

Good Luck!

Sandy

[Burke]

TP just received a notice from VA State uemployment to do a 2 year audit on his S Corp. I am trying to help. Any suggestions on 1; what are they looking for and 2: what do we need to show them? Anybody been through this type of audit? Thanks

Yes, been there and done that. Primarily they are looking for employees treated as independent contractors. What type of company is your client? Real Estate offices and Contractors are main targets. If it is a real estate office, better make sure there is an Independent Contractor Agreement on file for each agent. They will check them. Although they can pick up other things, like payments made to employees which should have been included in payroll and were not. For instance, my client paid for college tuition for his employee's daughter. Whether paid directly to an outside party or to the employee, it is considered compensation. Supposedly, they have a reciprocal agreement to share any information obtained in the course of the audit with the IRS, but it never was clear whether they actually did this. As far as what to show them, they should tell you what they want to look at. If he has QBks, they will want it. My client did not, and they went through every cancelled check on every bank account. Of course, they also looked at all the payroll reports, 941's and VEC-20's, and time sheets for employees.