UCP-30
Pennsylvania Unemployment Compensation
Preparing for Your UC Audit
INTRODUCTION
This brochure addresses the most frequently asked questions from employers who receive notice of a Pennsylvania (PA) unemployment compensation (UC) audit. Please read this information carefully since it will assist you when preparing for the audit, let you know what to expect during and after the audit, and supply you with contact information if you have questions.
WHY WAS I SELECTED FOR AUDIT?
Each year, several thousand employers are selected for audit to ensure compliance with the reporting and taxation provisions of the PA UC Law. Some employers are selected randomly from the entire population of employers covered under the PA UC Law. Additionally, businesses that do not report employees may be audited to verify that their workers are properly excluded from PA UC Law coverage. Finally, an employer may be audited if a reporting error is suspected or known to exist, or the employer is in an industry with a high degree of reporting errors.
HOW LONG WILL THIS AUDIT TAKE?
The time needed to complete an audit depends on the size of the employer, the condition of the employer’s records, and the number of issues that must be addressed.
WHAT IF I CANNOT PROVIDE RECORDS ON THE SCHEDULED AUDIT DATE?
Contact the auditor immediately to reschedule if you cannot be available on the date scheduled and cannot arrange to leave the records with another responsible individual. Please provide the auditor with several alternate dates so that rescheduling can be done promptly.
MUST I BE PRESENT AT THE TIME OF AUDIT?
You may designate a responsible individual to be present at the audit on your behalf. Because there is a questionnaire which must be completed as part of the audit, the individual you designate should be familiar with your records. If you must designate a representative who is not familiar with your records, contact the auditor by phone in advance of the audit to arrange to complete the questionnaire.
If your records are in the possession of another person, such as your accountant or bookkeeper, and you would like that individual to be your representative and to have the audit occur at their place of business, you must contact the auditor in advance of the audit and provide the name, address, and phone number of the designated representative.
The auditor will contact you a few days prior to the audit to confirm the appointment.
WHAT PERIOD OF TIME WILL THE AUDIT COVER?
The audit appointment letter indicates the time period for which records will be reviewed. Usually, an audit will cover one calendar year. However, an audit may be scheduled to cover a larger period of time or an audit may be expanded if the auditor discovers issues that could affect additional years.
WHAT RECORDS WILL THE AUDITOR EXAMINE?
Section 206 of the PA UC Law requires employers to keep accurate employment records. Section 63.64 of the PA UC regulations specifies the information that must be contained in employment records, and provides that employment records and other business records, such as ledgers and corporate minutes, are subject to review by a department auditor.
The list of records to be examined is attached to the audit appointment letter. Not all employers maintain all of these records, but those you do maintain should be made available.
WHY IS THE AUDITOR EXAMINING RECORDS, FORMS, AND DOCUMENTS IN ADDITION TO PAYROLL RECORDS?
Payments to workers are made differently and through different accounts from employer to employer. Thus, the auditor will look at all records that may contain information about remuneration paid to workers.
WHY ARE YOU AUDITING ME WHEN I CONSIDER ALL MY WORKERS TO BE INDEPENDENT CONTRACTORS?
Under the PA UC Law, an individual being paid for work he or she performs is presumed to be your employee. To rebut this presumption, you must show that the individual is free from your direction and control and is performing work for you as part of his/her independently established business. The auditor must verify that both of these conditions are satisfied for each individual you consider an independent contractor. If an individual is performing construction work, additional criteria under the Construction Workplace Misclassification Act (Act 72) must be met in order for the individual to qualify as an independent contractor. You may be asked to provide additional documentation in cases where there is a question if a worker is an employee or independent contractor.
CAN I REFUSE TO PROVIDE RECORDS TO THE AUDITOR?
Section 206 of the PA UC Law and Section 63.64 of the PA UC regulations provide that employment records and other business records must be made available to a department auditor for review. If you refuse to allow access to your records, the department may subpoena your records and enforce the subpoena in court. The department may assess a civil penalty of $1,500 for each day you withhold your records. Also, you may be subject to criminal fines or imprisonment for up to 30 days for failure to produce your records.
WHEN WILL I KNOW THE AUDIT RESULTS?
The auditor will discuss his/her proposed findings with you or your representative and, if applicable, give you a summary of the proposed audit adjustments before leaving your place of business or the location at which your records are kept. Once the auditor and his/her supervisor have completed their review of the audit, a letter will be mailed to you with the approved audit findings.
WHAT IF I DON'T AGREE WITH THE AUDIT RESULTS?
If the auditor’s proposed findings indicate that you owe PA UC taxes and you disagree with the auditor’s findings, the auditor will explain the tax assessment process and your appeal rights.
CAN THE AUDITOR ANSWER QUESTIONS REGARDING THE DEPARTMENT OF LABOR & INDUSTRY?
Auditors are knowledgeable about the tax provisions of PA UC Law. Therefore, they should be able to answer most UC tax questions. If you have questions about other programs or services within the department, the auditor can provide you with information on whom to contact.
WHAT IF I HAVE OTHER QUESTIONS REGARDING THE AUDIT?
You can contact the auditor directly at the number shown on the audit appointment letter, or email the department at:
uc-news@pa.gov
Written inquiries can be directed to:
Office of Unemployment Compensation Tax Services
651 Boas Street, Room 911
Harrisburg, PA 17121-0750
DISCRIMINATION PROHIBITED
The federal and state legal guidelines governing the department’s operation of the PA UC program mandate equitable, non-discriminatory treatment of all employers. No person dealing with the department will be discriminated against on account of race, color, religious creed, sex, age, national origin, handicap/disability, or political affiliation or belief.