I Received A Notice That I Am Being Audited By Does Tax. Why Am I Being Audited?

Section 46­118 of the District of Columbia Unemployment Compensation Law authorizes DOES to audit the records of DC employers. Each year DOES tries to audit a random sample of up to 2 percent of our contributory employers as recommended by the US Department of Labor. The primary objectives of the tax audit program are to:
  • Insure compliance with the taxing provisions of the District of Columbia Unemployment Compensation Law;
  • Foster understanding by employers of the unemployment compensation law;
  • Maintain good agency­employer relationships through dissemination of information pertaining to the overall employment security program.
A field auditor reviews an employer's acknowledged payroll and searches records for misclassified wages. The records reviewed and searched may include:
  • All cancelled checks
  • Time cards
  • Cash vouchers
  • Cash disbursement journal
  • General ledgers
  • Individual earnings records
  • Check register
  • Payroll journal
  • DOES tax reports
  • IRS Form 940
  • W­3 and W2s
  • IRS Forms 1099, 1096 and master vendor files
  • Petty cash
  • Chart of accounts
  • Profit and loss statement
  • Corporate minutes
  • Federal tax returns (1040, 1120, 1120S, etc.)
  • Any other records which may reflect services

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