Blog: Audits

A Department of Labor wage and hour investigation differs from a tax examination in a way that shapes everything about preparing for it: the investigator will interview your employees, and their statements can establish liability where your records are incomplete.

That single feature explains why recordkeeping matters more here than anywhere else in payroll. Where an employer's records are inadequate, an employee's reasonable estimate of hours worked can become the ...

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Audits:
How to Get Payroll Penalties Waived: Reasonable Cause Strategies7/16/2026

Penalty abatement is available more often than employers assume and granted less often than they hope, and the difference between the two outcomes is almost entirely about what the request demonstrates rather than what it asks for.

The single most useful thing to understand is what does not qualify — because most denied requests fail on grounds the employer could have anticipated.

Which Penalties Can Be Abated

Generally

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Audits:
IRS Payroll Tax Audit: What to Expect and How to Prepare7/15/2026

An IRS employment tax examination is narrower than most employers expect and more consequential than they hope. It is narrow because examiners work from a defined set of issues. It is consequential because those issues — worker classification, fringe benefit taxation, and officer compensation — produce cascading assessments rather than single adjustments, and because the trust fund portion carries personal liability for responsible individuals.

How Examinations

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Audits:
Payroll Audit Procedures: A Step-by-Step Guide for Internal Auditors7/14/2026

A payroll audit that samples randomly and tests arithmetic will find almost nothing, because payroll arithmetic is performed by software and is usually right. The errors live in configuration, in classification, and in the exceptions — and finding them requires a deliberately biased sample and tests aimed at specific failure modes.

This guide is written for whoever performs the review, whether that is internal audit, a payroll ...

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Audits:
What Is a Payroll Audit? Why Your Company Needs One Now5/7/2026

A payroll audit is a systematic review of whether the money you paid, the taxes you withheld, and the records you kept actually match what the law and your own policies required. That sounds procedural. In practice it is the only reliable mechanism for finding errors that are individually invisible and collectively expensive.

There are two very different things called a payroll audit: the one you run on yourself, and the one an agency runs on you. This guide covers both — starting ...

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Audits:
Payroll Compliance Checklist for 2027: What Every Employer Must Know5/6/2026

Payroll compliance fails in predictable places. It is almost never a misunderstanding of a complicated rule — it is a simple control that nobody owns, running unchecked for eleven months.

This checklist is organized by frequency, because that is how compliance actually works: some things must be verified every payroll, some quarterly, some once a year. Use it as a control inventory. Assign an owner to each line, and the annual scramble mostly disappears.

Reference Figures:

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Audits:
7 Common Payroll Mistakes That Cost Companies Thousands5/5/2026

Payroll errors are unusual among business mistakes: they are individually small, systematically repeated, and legally compounded. A $6 weekly underpayment is not a $6 problem. Multiplied across a job classification, back three years, doubled by liquidated damages, and topped with the plaintiff's attorney fees the statute makes mandatory, it becomes a six-figure problem.

These are the seven errors that generate the most exposure in practice, ranked by how expensive they get when they ...

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