Nevada DETR Audits – What You Need to Know

Have you received an audit notice from the Nevada Department of Employment, Training, and Rehabilitation (DETR)?  Try not to panic.  Here’s what you should know:

The purpose of the audit is to verify that the numbers reported to DETR match the numbers in your books.  The letter you received lists a bunch of documents the auditor wants to see at the audit meeting.  The auditor will check your numbers against the ones you reported to DETR and make sure they match.

If you have paid workers as independent contractors, the auditor wants to see backup documentation that they are, in fact, independent contractors and not actually employees for which you need to pay taxes.  The fact that you have an independent contractor agreement with them is NOT sufficient.  Read more about DETR’s rules on Employees and Independent Contractors.

This is the biggest sticking point.  Basically, if you hire someone to perform services for your company, you must put them through payroll unless:

1.  They have their own business offering the same types of services to other companies; AND

2.  You have evidence to prove this, such as invoices they sent you or a contract you had with them.

Even if you hire day laborers, you MUST put them through payroll.

If they are providing services to your company, ask for their business license.  If they don’t have one, make sure they invoice you and that you have an independent contractor agreement with them.