All federal and state taxing agencies perform audits to ensure compliance with their laws.

Oregon Revised Statutes (ORS) 657.660 gives the Employment Department the authority to audit employer records. If asked, employers must allow the Employment Department to review their records.

It could be one of several reasons. Often the audits are selected randomly. In order to ensure the system works well, we often sample employer compliance by size or type of firm.

Another common reason is if a former employee files a claim for Unemployment Insurance on wages you have not reported, or reported differently.

The auditor will explain this in detail during your scheduled pre-audit interview. An auditor confirms all wages have been reported correctly and all taxable wages have been computed correctly. 

Common types of unreported payroll include:

  • Payments for casual and contract labor
  • Commission
  • Corporate officer's pay, and
  • Independent contractors

It depends on the number of employees, the condition of the records and any questions that are raised. Some audits take two hours, others may take longer. Your auditor will best be able to answer this question for you once your audit has begun.

Yes. Any worker who is paid to perform services for you can be considered an employee unless their services meet exclusions in Unemployment Insurance Tax Law. 

The auditor will determine these issues based on clear legal and administrative guidelines, and the information gathered in the audit.

A typical audit covers three years, but can go back up to seven years. The auditor will explain the situation once the audit has begun.

We review payroll records, W-2s, 1099s, IRS records, Oregon Department of Revenue records and general disbursement records such as your check register, invoices and cancelled checks.

Usually the audit will take place wherever the records are located. Often, this is the employer's office, but may be at an accountant's or attorney's office. If you prefer, you may bring your records to our auditor's office.

That decision is up to you. You may consult with your accountant at any time during the audit process.

The Employment Department may want to audit in order to verify this.

The auditor will schedule a post-audit interview and explain the results to you as soon as the review is completed.

The auditor is authorized to arrange a reasonable payment plan if the liability cannot be paid immediately.

You would need to contact the other agencies to determine if you owe additional taxes.

You may request a hearing upon receipt of a Notice of Tax Assessment. You must request a hearing within 20 days from the date of the assessment.

Your request must be in writing and state why you believe the Notice is incorrect. Generally, hearings are conducted by phone by a neutral Administrative Law Judge.

No. You can only do that by paying the amount we determine you owe. If you prevail at the hearing, we will refund your money.

Usually you may reschedule an audit, unless it's dealing with an urgent matter, like an Unemployment Insurance claim. If this is necessary, contact the auditor at your earliest convenience to arrange another date or time.

Payroll Tax Audits

Hours of Operation

8:00 AM to 5:00 PM

Contact

Find local auditor contact information on our Tax Offices page.

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