Colorado Unemployment Insurance Audit Defense
Receiving an audit letter from the Colorado Department of Labor can result in stress and fear for any business owner. However, the anxiety that arises from a labor audit can be reduced or avoided with the help of a knowledgeable tax attorney. The experienced tax attorneys at Robinson & Henry can help your business navigate a labor audit by providing valuable legal advice throughout the audit process while working to protect your rights.
Colorado employers are required to pay unemployment insurance premiums to fund the state’s unemployment insurance program.
Under the Colorado Employment Security Act Colorado employers are required to provide unemployment insurance (“UI”) to workers. To accomplish this, Colorado employers must pay premiums to the state, quarterly.
A business may be required to pay UI premiums if it either:
- Paid wages of at least $1500 in a quarter during the prior or current year; or
- Employed at least one person for any part of a day for 20 weeks during the prior or current year.
This does not have to be the same person for all weeks nor must the weeks be consecutive weeks.
The Colorado Department of Labor & Employment Tax Audits unit conducts examinations of businesses to ensure they comply with UI premium obligations. The state’s Tax Audits unit conducts audits to ensure accurate reporting of employee wages, proper classification of employees, and the filing of appropriate reports.
The U.S. Department of Labor requires that all states audit at least one percent of employing businesses each year. The majority of these audits performed each year are chosen at random.
The UI Audit Process
The Tax Audits unit notifies businesses of the intent to audit by sending an audit letter that specifies the date, time, and location of the audit, as well as introduces the auditor. The audit letter also provides a list of specific records which will need to be provided at the audit. Audits are conducted at the location of your business’s records, which is generally at your place of business.
During the audit, the auditor will usually interview the business owner to determine the nature of the business, the type of service performed and to verify the ownership of the company. The interview part of the audit gives the auditor an opportunity to understand the business and allows the business owner to ask questions. Following the interview, the auditor will then review the records listed in the audit notification letter. These records can include: federal forms, tax returns, payroll records, business ledgers, check registers, or bank statements. After the audit, there will be a post-audit interview where the auditor will provide an Audit Report and explain the results of the audit and a receipt of the Liability Determination. If the auditor determines that taxes are owed interest and penalties may be assessed. The business will have the opportunity to pay these charges at the conclusion of the audit or set up a payment plan.
The findings of the Auditor may be appealed.
The findings may be appealed through the Industrial Claim Appeals Office. To appeal a written request for an appeal must be submitted within 20 days of the issuance of the notice of liability. After processing the written request the Appeals Section of the Department of Labor will schedule an appeals hearing. During the appeals hearing is where the business owner or officer of the business will have the opportunity to challenge the findings and present information in support of the challenge.
The Appeals Section will rule on the appeal and issue a decision. If the ruling is in favor of the business the Notice of Liability will be removed from the record. However, if the appeal is lost it is not over! The ruling of the hearing officer may be appealed to the Industrial Claim Appeals Panel. To do so a brief or written argument is submitted to the Appeals Panel. After all briefs are received, the Industrial Claim Appeals Panel will review them and issue a Panel Decision. Again, a ruling against the business is not the end of the road and the business is finally free to exit the Department of Labor’s administrative process and bring the case to the Colorado Judicial system in the form of an appeal to the Colorado Court of Appeals.
Although the businesses selected for UI audits are typically chosen at random, no business owner wants to endure the stress associated with an UI audit. While legal representation is not required for a UI audit or the appeals process, a knowledgeable attorney can help alleviate those stresses and fight to protect your interests.
The attorneys at Robinson & Henry can provide your business with the following services during a UI audit:
- Legal Representation for a UI Audit – You have the right to legal representation during a UI audit. By giving the attorneys at Robinson & Henry Power of Attorney, we can attend the audit on your behalf. We will work with you and your business every step of the way to ensure that you are prepared for the audit. Our attorneys can fill out the appropriate paper work, review your business’s documents, and answer any questions that may come up during a UI audit.
- Help Your Business Appeal UI Audit Findings – If you are unhappy with the findings of a UI audit or believe that the auditor has made an error, you do have recourse options. The attorneys at Robinson & Henry can work with you to review your case and determine a proper course of action for appealing a UI audit. Our experienced staff has navigated the appeals process and will ensure that all appeals processes are followed properly. We can represent your business during an Appeals Hearing and will work with you to draft briefs and written arguments in support of your position. If you remain unsatisfied with the findings of the hearing, we can continue to represent your business before the Industrial Claims Appeals Panel and, if necessary, the Colorado Court of Appeals.
- Identify Potential Reasons for UI Audit Findings or Other Tax Problems – A successful audit defense or audit appeal begins with reviewing the business. Our attorneys will review your business records to determine if the audit findings are defensible or determine a future course of action to avoid potential issues.
The Robinson & Henry Advantage
Our experienced attorneys are well versed in tax, business, and civil litigation practices. The interdisciplinary approach offered by Robinson & Henry ensures the best results possible for your business. We routinely advise our clients of options that CPAs and tax resolution firms cannot or do not.
If your business has received a notice of a UI audit, call 303-688-0944 or email us at info@RobinsonandHenry.com as soon as possible to schedule your free initial consultation to discuss your circumstances and consider your options moving forward.