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Audits, appeals and employer tax assistance process

The Employment Security Department (ESD) administers the state unemployment-insurance system. Businesses with employees working in Washington state must register with us and file quarterly wage and hour information and pay unemployment taxes.

Employment Security is one of three agencies that created an audit video to help you understand the process, “How to Prepare for an Audit: A Guide for Small Businesses.” Employment Security’s segment focuses on unemployment-insurance tax audits. The video answers basic questions such as, What should I expect when an audit occurs? and How should I maintain my records for unemployment insurance?

Why does ESD audit employers?

We audit employers' records to ensure that employers pay their fair share of unemployment insurance taxes. This is necessary so that employees who lose their jobs through no fault of their own will have unemployment benefits available.  Having an accurate record of their employment history also helps us determine the amount of their benefits.

We accomplish this goal primarily by:

  • Verifying that employee’s wages and hours are accurately reported.
  • Ensuring that businesses are paying the correct taxes based on their experience with unemployment.

How are businesses selected for an audit?

Approximately 10 percent of our audits are selected randomly through a computer-generated program.

We also actively pursue potentially non-compliant businesses for audits in a variety of ways.

  • 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.

For more information about the audit process, read FAQ's Audit page.

Common audit findings

Working with your ESD tax specialists during an audit

Audit appeal process

Appeal an unemployment-tax decision

Deferred-payment program

Reporting fraud and abuse

Workshops and educational resources

You can attend a local workshop to learn more about unemployment taxes and state services, such as:

  • tax requirements for various type of businesses
  • how to report and pay state taxes properly
  • requirements for reporting new employees

You can find out more information about the scheduled workshops, date, time and locations online at: Workshops and education.

ESD maintains email lists to send updates and reminders.  You can sign up at Sign up for email reminders.

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