IRS Tax Experts Blog

  The notice contained in the California Franchise Tax Board can be frightening to any taxpayer. Even after you have endured a federal IRS audit , California can spring a piggyback audit, acting upon the IRS auditor. It simply implies the state sees through your taxes on the basis of the federal audit. Knowing about this process is crucial to Californians who have already faced the IRS, since it can help them anticipate any scrutiny at the state level and handle it in a manner that helps them avoid any complications and penalties. Find the best tax attorney in San Francisco who can help. What is a Piggyback Audit? Piggyback audit. The piggyback audit arises where the California FTB piggybacks off an IRS audit. The two agencies are interconnected by data exchange, and hence any federal revisions, such as deductions that are disallowed, reclassification of income, or added tax, are stressed and transmitted to California. Since state tax liability is generally related to fed...

  No company ever wants to see that envelope stamped with “Employment Development Department” land in their mailbox. Payroll tax audits can feel overwhelming, even if you think you’ve done everything right. But here’s the truth: much of the stress comes from being caught off-guard. Preparing in advance—conducting what’s often called a “self-audit”—can save you sleepless nights, penalties, and a lot of scrambling. So, how do you pre-audit yourself before the EDD does it for you? Let’s break it down. Start with the Basics: Employment Classification This is where a large chunk of audits turn messy. Independent contractor vs. employee—sound familiar? The state is particularly focused on this distinction. Take a hard look at your staff. Are any “independent contractors” actually working with you like full-time employees? Do they follow set hours, use your tools, or take direct supervision? If the answer is yes, that classification might be risky. A smart move is reviewing contr...