ATTENTION ALABAMA RETAIL COMP PARTICIPANTS: In the past few weeks, your business may have received an envelope from Alabama Retail Comp with the words “Audit Information Request” in bold red type above the address window.
This request for audit information is sent each January to ARA members who participate in the ARC workers’ comp fund. While the word “audit” may evoke images of the tax man knocking at your door, ARC’s payroll audit is just routine payroll verification.
ARC participants “pay premium throughout the year based on an estimate of payroll,” said Toni Hill, premium administrator for the fund. “Because it is based on an estimate, at the end of a policy period, we want to determine exactly what your payroll was, so we know whether to issue a refund or send a bill for additional premium.”
DON’T PANIC AND FOLLOW THE CHECKLIST
Every workers’ comp fund, by law, must perform annual payroll audits of their participants.
In this audit, no ARC employee will come to your business to look at your books.
An ARC payroll audit simply requires a business to provide information that documents actual payroll for the past calendar year.
The first page in the Audit Information Request envelope “is a short checklist of information, we need returned to us by Feb. 15,” said Toni.
To verify payroll, ARC relies on information found in W3, W2s, and 1099s or state quarterly wage reports and federal 941s.
Other information such as overtime records and workers’ comp insurance certificates for subcontractors also may be required in certain circumstances.
“After doing this for 23 years, my best advice is to simply follow the checklist,” Toni said. “If a participant sends back the items in the checklist, ARC should have all we need to complete the audit.”
IMPORTANCE OF JOB TITLES AND JOB DUTIES
The second page in the Audit Information Request envelope asks for job titles and duties for all employees who received W2s and individuals who received 1099s. ARC needs the information “so we can class employees correctly,” said Toni.
Your workers’ comp rating is based on employee job duties. Depending on their duties, employees are assigned different class codes with different rates. Ensuring employees are classed correctly is critical to making sure a participant’s premium is calculated properly. “For most of ARC’s participants, filling out the second page of the audit request is easy. More than half of our audits involve only one class code,” Toni said.
HAVE A QUESTION? CALL TONI!
People question it, but Toni says, “I love auditing; it is like a puzzle.” She adds, “It is also one of the few times a year when our participants call me.”
Got a question? “Pick up the phone and call me or send me an email,” says Toni. “I love talking to our members. I love helping our members understand workers’ comp.”
To contact Toni or any member of the policy team, call 800.239.5423 or send an email to email@example.com.