Virginia Preparers

[TAXMAN]

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

[Gail in Virginia]

They should have sent your client a list of what they want to see to do the audit, and it is pretty comprehensive. As for what they are looking for, my impression was they are looking for any contract labor that should have been treated as employees, or any wages paid under the table as cash. Therefore, they basically want to see all the employment records, corporate books and tax returns plus supporting documentation. Your mileage may vary.

[kcjenkins]

Usually it's a "financial Colonoscopy". Make it clear up front that you will have to charge by the hour. The more the client does to get organized, the better for him in keeping your fees down. Once you have that understanding in place, Gail's advice is spot-on. Might have been just 'luck of the draw', or maybe triggered by some former 'sub' asking for unemployment, etc. Does not matter now WHY. But discuss the issue of subs in detail in advance, so you know what to expect.

PS NEVER EVER LIE to them, if you don't know some detail, just say that and tell them you will get the info and get back to them. DO NOT ever assume you know annything you have not already checked yourself. You are not responsible for the outcome, but you are for what you tell them.