Frequently Asked Questions about Audits
We will send a letter detailing what documents need to be available and the time frame the audit will cover. This letter will also include the pre-scheduled date and time the audit will take place with you or your authorized representative. The following are examples of the type of documents we will be requesting:
- Payroll and accounting records
- Employee time records
- Records showing you own the business
- Bank records
- Annual and quarterly tax records (State and Federal)
- Check Register
- General Ledger
- IRS Form 1099s
- Financial Statements
- Business license and registration numbers for subcontractors along with copies of contract agreements and invoices
- Corporate officer opt-out forms
For more information, link to the video, How to Prepare for an Audit.
- You are reporting all of your workers properly. See employee reporting requirements.
- All independent contractors meet state requirements for independent contractors.
- You are in compliance with these laws:
RCW 50.04.100, Employment
RCW 50.04.140, Independent Contractor
RCW 50.04.270, Casual Labor
RCW 50.04.320, Wage Remuneration
RCW 50.12.070, Employer Records
For more information, read about working with your ESD tax specialist during an audit.
- Compare information shared with other agencies to identify patterns of inconsistent reporting.
- Receive tips from employers in the same industry who are at competitive disadvantage when similar businesses are not paying their fair share of taxes.
- Select from industries that historically show a high level of non-compliance.
- Develop leads from the community and then submit them to our statewide audit coordinator team for consideration.
- Watch closely for employers that try to avoid higher tax rates through transfer of ownership or reclassification of their business type.
The goal is to ensure that employers report hours and wages correctly and pay the appropriate amount in unemployment taxes.