Each employer must keep employment and payroll records that include all the information in Texas Workforce Commission’s Payroll Records Requirements. TWC may inspect and copy the records at any reasonable time and as often as necessary. Section 301.081 of the Texas Unemployment Compensation Act (TUCA) authorizes TWC to conduct a tax audit.
TWC may require reports about your employees to effectively administer the TUCA.
Employment and payroll information TWC obtains may not be published. It is also not open to public inspection. A public employee may access the information. But they may do so only as required for their job duties, consistent with TWC rule and federal law.
The primary objectives of an unemployment insurance employer tax audit are to:
- Ensure compliance with the taxing provisions of the Texas Unemployment Compensation Act
- Foster understanding by employers of the unemployment compensation law
- Establish a relationship between TWC and the employer by sharing information related to the unemployment insurance program
A field auditor reviews an employer's acknowledged payroll records while conducting their audit. They also search the records for misclassified workers and wages. These records include:
- All canceled checks, check stubs, check registers, and bank statements
- Cash vouchers
- Cash disbursement journal
- General ledger
- Individual earnings records
- Payroll journal
- TWC quarterly tax reports
- IRS forms 940 and 941
- W-3 and W-2s
- IRS forms 1099, 1096
- Master vendor files
- Petty cash
- Chart of accounts
- Profit and loss statement
- Corporate minutes
- Federal tax returns (1040 Schedule C, 1120, 1120S, etc.)
- Any other records which may reflect services
Secure Form a simple method designed for employers to submit confidential information to the TWC Tax Department. The Secure Form Instructions will assist you with uploading documents.