Payroll Manager's - Kluwer Law International

Payroll Manager’s Letter
Editors
Dorinda DeScherer, J.D.
Terence Myers, J.D.
Managing Editors
Joanne Mitchell-George, J.D.
Amy Burke
Elizabeth Venturo
Editorial Director
Ellen Ros
Group Publisher
Paul Gibson
This publication is designed
to provide accurate and authoritative
information in regard to
the subject matter covered. It
is sold with the understanding
that the publisher is not engaged
in rendering legal, accounting,
or other professional service.
If legal advice or other expert
assistance is required, the services
of a competent professional
person should be sought—From
a Declaration of Principles jointly
adopted by a Committee of the
American Bar Association and a
Committee of Publishers.
© 2010 Aspen Publishers.
All Rights Reserved.
This material may not be used,
published, rewritten, copied,
redistributed or used to create
any derivative works without
prior written permission from
the publisher.
Payroll Manager’s Letter
(ISSN 0895-7975) is published
semimonthly by Aspen Publishers,
76 Ninth Avenue, New
York, NY 10011. One-year
subscription costs $325. To subscribe,
call 1-800-638-8437. For
customer service, call 1-800-
234-1660.
POSTMASTER: Send
address changes to Payroll
Manager’s Letter, Aspen Publishers,
7201 McKinney Circle,
Frederick, MD 21704. Printed
in U.S.A.
Permission requests: For
information on how to obtain
permission to reproduce content,
please go to the Aspen
Publishers website at www.
aspenpublishers.com/permissions.
Purchasing reprints: For
customized article reprints,
please contact Wright’s Reprints
at 1-877-652-5295 or go to the
Wright’s Reprints website at
www.wrightsreprints.com.
www.aspenpublishers.com
For example, if the audit is to
determine if a worker was an independent
contractor, the Accounts
Payable or HR department would
need to be involved. Or your
company may be audited as part
of a widespread audit targeting a
particular industry. Knowing what
initiated the audit will assist you in
determining where your potential
exposure may be and who you
may need to involve in the audit
process.
2. Determine if you can handle the
audit yourself. Sometimes payroll
managers feel that the receipt of an
audit notice means they must run
to their corporate counsel, outside
attorney, or CPA. Before you do
so, try to assess the situation. Are
you comfortable dealing with the
auditor? Do you have the time to
deal with the auditor’s requests?
Remember, you are probably the
most knowledgeable person about
employment tax issues in your
company.
BE PREPARED If you
determine that you will need
help, be sure to seek a professional
who is well versed in
employment tax law, be it an
attorney, CPA, or consultant.
(Some payroll managers found
that they spent so much time
trying to educate the professionals
about the specifics of the
company’s employment tax situation
that it would have been
easier to handle the audit
requests themselves.) Keep in
mind that the audit is not something
you can ignore.
3. Specify one person as the point
of contact in the company for the
auditor. You don’t want the auditor
asking one person for some
information and another person
for additional information. Let
the auditor know the name of
the person who can be contacted
for all questions and requests
for information. All information
should flow both from and to the
designated point of contact so that
you are aware of the information
provided and the requests made by
the auditor.
4. Try to limit the list of records to
be provided. Often, the auditor
will request more records than
are needed, such as three to four
years’ worth of employment tax
records. Ask the auditor if you can
start with just one year’s worth
of records and try to determine
from the auditor if the problem
being examined is restricted to a
particular time period.
5 . Review any records before
handing them over to the auditor.
Again, you don’t want to be
surprised. Nor do you want any
company employees or executives
to be surprised. If you see
something in the records that you
recognize as a potential problem,
let the proper company officials
know.
6. Be cooperative but not overly
helpful. Gone are the days when
you could stick the auditor in
the “dungeon” to review the
company’s files. You don’t want to
antagonize the auditor. However,
don’t make it so comfortable that
the auditor won’t want to leave.
Put the auditor in a restricted area
such as a conference room. Be sure
the room is not near the accounting
records.
CAUTION You don’t
want to make the mistake that
one company did when it was
audited by the state of California.
The auditor was directed to set
up shop in the file room thereby
having access to all the company
records. This resulted in a $1
million assessment. If the company
representative had taken
the time to meet with the auditor
and had given the auditor
only the requested files, you can
assume that the assessment may
have been considerably less.
7. Advise contractors if the audit is
a worker classification one. If you
2
Payroll Manager’s Letter