An IDES audit is a serious matter and careful consideration needs to be made especially in the beginning of the audit process. If your business is chosen for an IDES audit, it’s essential to seek professional guidance since it has the potential to escalate to multi-year audits, IRS audits and Illinois Department of Revenue audits. Illinois Department of Employment Security is the agency responsible for administering unemployment compensation to unemployed Illinois workers. Therefore, it needs to ensure that it collects the correct wage contribution from employers in Illinois.
In IDES audit is a formal investigation to ensure that Illinois businesses contribute the correct amount to the IDES unemployment fund. IDES wants to ensure that Illinois employers are paying the correct amount of their unemployment insurance liability, so businesses are routinely audited to ensure compliance. The amount of the liability is the assigned contribution rate multiplied by the wage base ($12,960 in 2017).
Why was my business chosen for an IDES audit?
The IDES audits businesses generally for three reasons: random selection, errors in completing the UI/3-40, or because of an unemployment insurance claim.
What records will IDES want?
IDES will notify the responsible party regarding the information required to conduct the audit. The information requested is generally, payroll records, accounting ledger, checks written, and bank statements.
Pay special attention to any “independent contractors” for the year in question. IDES has very specific rules to determine the status of an independent contractor, Section 212(A), (B), and (C).
Initially, only one year. If the amount owed as a result of the audit is over $2,000, then the IDES auditor will go back to the prior year and audit that year.
Why seek professional representation?
An experienced professional can ensure that the process is concluded quickly and effectively. A professional also understands the very important independent contractor test used by IDES. A strategy should be developed at the beginning of the audit process to minimize tax liability, minimize the potential for additional audits, and reduce the possibility of escalation to other taxing agencies.
Contact me for expert help!
It’s best not to attempt an IDES tax audit without professional help, since it has the potential to become a financial disaster. Get help as soon as you receive your audit notice. If you would like assistance with an IDES audit contact me for a free email or phone consultation.
My name is Noel B. Lorenzana, and I am an Illinois Registered Certified Public Accountant with over 20 years of experience, dedicated to providing outstanding tax and accounting services to individuals and small businesses in the Chicagoland area. Contact me to find out how I can help you with your IDES audit.
Disclaimer: Any accounting, business or tax advice contained in this article, is not intended as a thorough, in-depth analysis of specific issues, nor a substitute for a formal opinion, nor is it sufficient to avoid tax-related penalties. If desired, I would be pleased to perform the requisite research and provide you with a detailed written analysis. Such an engagement may be the subject of a separate engagement letter that would define the scope and limits of the desired consultation services.
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