Independent Contractor Compliance Blog

SACRAMENTO-The annual dance in the legislature to get a state budget is having an affect on the state tax auditors ability to travel.

The Sacramento Bee recently reported that the “Franchise Tax Board auditors…spend less time auditing and more time filling out paperwork and figuring out the precise bureaucratic language that will justify work-related trips…”

This is because the governor restricted all state employee travel (including tax auditors) throughout the state until a budget is passed.  This means all state tax auditors, including Employment Development Department auditors are traveling less and making up things to do in the office.

This doesn’t mean they aren’t doing anything.

These generic restrictions happen almost every year in state government, during the traditional “California Budget Crisis.”  But it may not be all good news for employers who are in the middle of an audit.  In my experience the industrious state tax auditors will dig up their old cases, buried and forgotten in their desk drawers and on their laptop computers, and start to work on them again.  These are the cases where the business has already been visited and the business records examined.  In most cases the auditor knows what the outcome is going to be, but has been procrastinating.  What remains to be done is the “write-up” and a discussion (exit interview) with the taxpayer to explain the findings.  So if you were visited by a state auditor last year and heard nothing from him since, your luck may have changed.

When the budget is over

When the budget is signed, everything returns to business as usual and the auditors will be making appointments again. 

So enjoy the reprieve while it lasts.