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The California Employment Development Department (EDD) conducts employment tax audits of businesses similarly to the Internal Revenue Service (IRS). The EDD seeks to determine if employers are meeting their obligations to withhold employee's state taxes from wages, deposit employment taxes with the EDD and file EDD employment tax returns. The IRS and EDD share information so an employment tax audit by one of them may lead to an audit by the other. Employment tax is a high risk area for businesses and a tax enforcement priority for the IRS and EDD. If a business is audited, having professional tax representation can be critically important in order to defend taxpayer rights.