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California EDD audit defense

The Employment Development Department (EDD) enforces California payroll taxes, unemployment insurance, disability insurance, and employment training tax. When EDD selects your business for a payroll tax audit or a worker classification review, the stakes include back taxes, interest, penalties, and reclassification of contractors to employees. G&S Accountancy provides structured defense, document preparation, and audit representation aligned with how EDD actually builds its cases.

Payroll tax audits and benefit assessments

EDD may examine whether wages were reported completely, whether taxable benefits were captured, and whether payroll tax deposits and filings reconcile to your general ledger and third-party payroll registers. We work from source documents — payroll journals, Form DE 9/DE 9C filings, W-2s, 941s, state withholding, and cash compensation — to build a reconciled position before the auditor locks assumptions.

Worker classification: AB5, Borello, and the 1099 vs. W-2 question

California uses the ABC test for many relationships (with statutory exceptions), and the multifactor Borello test still applies in specific contexts. EDD classification disputes are rarely “one form and done.” They turn on direction and control, integration into the business, opportunity for profit and loss, and the parties’ course of dealing. We help you organize contracts, change orders, insurance certificates, onboarding packets, and contemporaneous communications so the record supports your classification where the law allows.

1099 independent contractors vs. employees

If EDD proposes reclassification, the exposure can cascade across quarters and years. We quantify the proposed assessment, identify factual gaps in EDD’s workpapers, and map defenses (including applicable exceptions and safe harbors) to the specific workers at issue. Where settlement is appropriate, we frame payment plans and voluntary compliance options that match your cash flow.

What we need from you

  • Worker roster with role, contract type, and pay method
  • Executed agreements and scope-of-work exhibits
  • Payroll provider exports and EDD filing history
  • Prior audit or notice correspondence

If you received an audit notice, a Statement of Issues, or a proposed assessment, start a confidential review: request a consultation or call (909) 466-1808.