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IRS & Work Compensation Audit
With over 83% of IRS and sales & use tax audits resulting in assessments, the states visit early and often while the taxpayer becomes a never-ending revenue source. Upon engagement, AMARAL Accounting Services LLC will defend the taxpayer against the audit, ensuring that proper audit methodology is employed to reduce the assessment, and identify and secure refunds along the way.
Our sales tax audit defense practice is managed by our client engagement team comprised of tax managers, former state auditors and tax attorneys well-versed in audit procedures. Our expert team always ensures your final assessment is fair and that any refunds due to you are identified and credited accordingly.
AMARAL Accounting Services LLC can manage the audit process from start to finish or can simply serve as a final set of eyes. Our audit team will gather the files necessary to build the case and determine which issues are ideal for appeal. We manage the information flow between the client and the state taxing agency to ensure complete and accurate responses, while assisting with accelerated dispute resolution processes to reduce the costs associated with sales tax audit defense activities.
Workes Compensation Audit
Your worker's compensation insurer will likely initiate the audit process soon after your worker's compensation policy expires.
You may receive a letter from your insurer or a phone call from the person assigned to conduct your audit. Your assigned auditor should schedule the audit at a time that is convenient for you. The date should be far enough into the future that you'll have adequate time to collect the information the auditor will need. Ask the auditor to provide you a summary of the data he or she will require to perform the audit.
Note that your assigned auditor may or may not be an employee of the insurer. Some insurers maintain an in-house audit department staffed with their own employees. Others outsource the audit function to an independent auditing firm. The process should be the same whether the audit is performed by an employee of the insurer or a contractor.
Records You Will Need
The auditor will need various financial information for the time period covered by the policy being audited. Here is the type of information you may be asked to provide:
Tax forms, particularly forms 941 and 944, Employers Federal Tax Return (quarterly and annual, respectively)
Records of cash disbursements
Payments for services provided by independent contractors. The auditor will need to verify that these workers are not your employees.
Payments for services provided by subcontractors
Certificate of insurance for each subcontractor you hired
W-2 and 1099 forms
Job description for each worker. Make sure it accurately describes the worker's duties.
Description of your business operations
Payroll records for the term of the policy. The auditor will need to verify all sources of pay provided to each worker (salary, bonuses etc.).
Payroll limitations applicable to executive officers, partners, sole proprietors etc. that are covered under the policy
Once you have collected the necessary data, you'll need to organize it. Put all of your payroll records (such as W-2 forms, pay stubs, and overtime records) together so that the information is easily accessible. Likewise, place all information related to subcontractors, including payment amounts and certificates of insurance, in one place. Your efforts will pay off, making the audit easier and faster.
What's Included in Payroll?
Your worker's compensation premium is calculated by multiplying a rate times your payroll and then dividing the result by 100. The NCCI and most state workers compensation authorities refer to payroll as remuneration. These terms are often used interchangeably. Both mean the monetary value of the services your employees provide to your organization.
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