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4 Replies Latest reply: Nov 25, 2008 12:59 AM by Lighthouse24 RSS

TX Workforce Commission audit

GlassCreation Newbie
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We just received a letter today about an upcoming audit by the Texas Workforce Commission. Is this something routine with the commission or do they think there is something inaccurate with our reporting? Any insight would be great.
  • Re: TX Workforce Commission audit
    Lighthouse24 Master
    Currently Being Moderated

    The TWC performs random audits on about 4 percent of Texas employers every year. They also target specific industries where workers are frequently misclassified.

    Beyond that, an audit is usually initiated when a former worker files an unemployment claim, yet TWC records show that the employer did not pay unemployment taxes on that employee's wages. The other thing that can cause an audit is when a competitor (or someone else) files a report with the TWC stating that an employer is misclassifying employees (for example, claiming to have independent contractors who are actually being managed/treated as statutory employees).

    So like most audits, it's inconvenient, but nothing to worry about -- unless there is, in fact, something that you know you should worry about. I sincerely hope all is well. Good luck!
    • Re: TX Workforce Commission audit
      GlassCreation Newbie
      Currently Being Moderated
      Lighthouse24 thank you for the info. I have had a worker on a 1099 for some time now. Could they be looked at as an employee, possibly. Say this is what they are after, do you know what they will do? Thanks again.
      • Re: TX Workforce Commission audit
        Iwrite Master
        Currently Being Moderated
        Is this person an employee or a contract worker? Have you extended benefits to this person? I think it is more of what Lighthouse has mentioned, they are doing a random audit. As long as everything is above board and documented, you shouldn't have any problems.
      • Re: TX Workforce Commission audit
        Lighthouse24 Master
        Currently Being Moderated

        Let's assume that you made the appropriate tax filing with a 1099, all of your contractor payments are on the books, and you can show that you had a credible basis for treating the person as an independent contractor. The TWC may agree with you, and that will be that. The worst that would likely happen (if the TWC ruled otherwise) is that you'd be required to reclassify the employee and pay the back unemployment taxes.

        They can fine you for a misclassification (but probably wouldn't if the auditor believed that you believed you were doing the right thing). The consequences get more severe if the auditor concludes that an employer was trying to hide wages (for instance, hiring illegal aliens as employees, calling them independent contractors, and paying them off the books).

        Again, good luck.

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