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Cal Audits

No Payroll or Sub Costs? Now What?

What if the insured claims to have no payroll or sub costs during the audit period? Read below for this simple solution.


When an insured says they have no payroll or sub costs the best thing to do is ask them to send us the prior year’s business tax return forms to show what the business did in the prior year. Part of the prior year will be our policy period so if the form shows zero payroll and sub costs then this will help confirm what they are telling us.


The forms to ask for are one of these.

- Sole Proprietor - ask for form 1040 Schedule C

- Corporation - ask for form 1120

- Partnership - ask for form 1065


Once one of these forms is received to confirm what they tell us over the phone, the auditor can then contact the insured to do the interviews, etc.


Any further questions on the subject, contact Bob Thompson, Audit Manager.

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