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 Are You At Risk of an Unemployment Tax Audit?


I and many of my fellow CPA’s have noticed a significant increase in Maine Department of Labor (“DOL”) audits of small business in the past 18 months (June, 2014). It appears to be the case that new instructions have been issued to DOL auditors to specifically target small business corporations in order to extract additional Maine unemployment taxes. Most small family businesses in Maine consist of an owner-officer and perhaps a few employees. These DOL audits primarily target the compensation paid to the owner-officer of the corporation being audited.


By law, the Maine unemployment tax system taxes compensation up to $12,000 per year per employee. Maine unemployment taxes for an owner-officer of a corporation range from approximately $300 to $600 per year.


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