A blank copy of the C-51 - Field Audit Report is located in the Appendix Section of this manual.

The information below corresponds to numbered items on the Form C-51 - Field Audit Report. For Form C-51 - Field Audit Report to be accurate, the Auditor must address the correct audit scope during the audit investigation. Refer to the Audit Manual - Table of Contents to locate other chapters of this manual that have instructions for determining the correct audit scope.

Items 1 to 7 and 9 are downloaded from the Tax system.

1. Tax Area: Enter the Auditor's 2-digit Tax Area number (XX).
   
   
2. Auditor No.: Enter the Auditor's 4-digit AE ID number (XXXX).

EMPLOYER INFORMATION - Section of the C-51

3. Employer's TWC Account No.: Enter the employer's 9-digit account number.
   
   
4. Federal Id No.: Enter the employer's 9-digit Federal ID Number.
   
   
5. Employer: Enter the employer's account styling (line 1 of EMF) and the employer's zip code. If truncated by audit program, auditor is not required to complete.
   
   
6. Nature of Business/NAICS: The nature of the employer's business (e.g., trucking company, restaurant, crew leader), and NAICS code.  If this information is not downloaded, auditor can select the appropriate NAICS code from the list on the Employer Tab to complete these items.   If the NAICS code is incorrect, DO NOT correct the downloaded information.  LMI (Labor Market Information) is responsible for this information; therefore any changes to this item will not post to the Tax system.  The auditor can enter a comment that they instructed the employer/representative to contact the TWC NAICS – help line so they can obtain the appropriate form(s) to update the information.
   
   
7. Type of Business: Check the appropriate box to indicate the type of business.
   
   

   Individual     =	Individual Owner or Sole Proprietorship
   Partnership   =	Partner
   Corporation  =	Corporation
   Other            =	Other type of business entity.  Indicate the type, for example: Trust, Joint Venture, Association, Estate, Limited Liability Company

   
   
8. How was ownership verified? Select from the list to indicate how the ownership of the business was verified. Selecting "Other Documentation" will require the auditor to enter comments to explain how ownership of the business was verified.
   
   Business ownership may be verified by examining business licenses, professional license of a sole proprietor, partnership agreements, corporate charters, state sales tax permit, Sec. of State information, or income tax returns.  If license information was obtained via the web attach a copy to the audit work papers.   
   
   The Auditor must be specific about which income tax return, or license was examined (1120 - corporation, 1120S - subchapter S corporation, 1040 - Sch. C, E or F - individual or LLC with single individual as member, business expenses, 1065 – partnership & LLC with multiple members, state sales tax license, comptroller franchise tax report; etc.). The year of the tax return must also be listed on #8 of the C-51 audit report form.
   
   Asking the employer who owns the business is not acceptable in verifying the ownership of a business. Verification of the ownership may not be accomplished by examining the employer's copies of federal Forms 940, 941,and 943, state unemployment tax reports, W-2 or W-3 forms, or sales tax reports (although the sales tax license may be used).
   
   If a federal tax return is used to verify ownership, the return should be for the year that is being audited. Using a tax return for a prior year may not provide the most recent ownership information, and by relying on outdated information, the Auditor may overlook important ownership questions, such as:

9. Date 1st Taxable Wages paid: The date first taxable wages were PAID as shown on the EMF.

QTR/Yr, Tax Rate will be automatically entered from downloaded data.

10. Audit Date: The date of the audit, default is the current date, auditor can change as necessary.  This is the scheduled date printed in the audit letter for doing the audit.  If the audit was postponed, it is the date the AE appeared at the employer's office or the bookkeeper's office to conduct the audit, or the date an employer showed up at the Tax office for an in-office audit.  If the Auditor finds it necessary to contact the employer for additional records, the audit date would be the last date the Auditor dealt with the employer or the employer’s representative.
    
    
11. Audit Scope: The period of time that covers the records audited, such as 1/1/20YY to 12/31/20YY, and not the quarters covered. This item is completed by the audit program from the years the auditor works on. It can be changed by the auditor if necessary. Reference Chapter 1 - "Tolerance ⁄ Expanding the Audit" for information on audit expansion criteria.
    
    * * * * * Items 12 to 23 are automatically entered from data in the program. * * * * *
    
    
12. Audited Total Wages: Enter the total wages audited for each quarter of the audit period.
    
    
13. Underreported Total Wages: Enter the total wages underreported for each quarter of the audit period.
    
    
14. Audited Taxable Wages: Enter the taxable wages audited for each quarter of the audit period.
    
    
15. Underreported Taxable Wages: Enter the taxable wages underreported for each quarter of the audit period.
    
    
16. Audited Tax: Enter the tax audited for each quarter of the period audited.
    
    
17. Underreported Tax: Enter the tax underreported for each quarter of the period audited.
    
    
18. Reported Total Wages: Enter the total wages reported by the employer for each quarter of the period audited.
    
    
19. Overreported Total Wages: Enter the total wages overreported by the employer for each quarter of the period audited.
    
    
20. Reported Taxable Wages: Enter the taxable wages reported by the employer for each quarter of the period audited.
    
    
21. Overreported Taxable Wages: Enter the taxable wages overreported by the employer for each quarter of the period audited.
    
    
22. Reported Tax: Enter the tax reported by the employer for each quarter of the period audited.
    
    
23. Overreported Tax: Enter the tax overreported by the employer for each quarter of the period audited.
    
    NOTE: Do not net the over and under reported amounts for total wages, taxable wages, or tax. Show the overreported and the underreported amounts separately.
    

24. Change Audit: The program reviews the data and indicates if the audit qualifies as a change audit. If wage information stored in the Agency’s records must be changed, the audit is a change audit. The DOL/TPS definition for a change audit is "An audit resulting in the discovery of Wages or Taxes not previously reported or reported incorrectly by the employer".

25. Hours Spent: Program will compute the total hours for the audit by adding the computer usage time to the auditor entered non-program time. Audit time will be displayed in whole hours. Auditor can include the time it took to schedule and conduct the audit, the time required to prepare any adjustment reports, and the post-audit conference. DO NOT include travel time.
    
    
26. Number of Quarters Audited: The number of quarters audited. If the audit is other than four quarters, the auditor must explain in the comments field.
    
    
27. Audit Type: The program will display one of following audit types (based on the answer for question #28):

28. Number of Employees: Displays the total number of employees in the year audited. Includes individuals reported to TWC plus misclassified workers found.
    
    
29. Audit Source: Select the appropriate audit source from the drop down list.
    
    

    A	= State Office Audit Assignment
    B	= B-27 (Justify)
    C	= Chargeback
    F	= Fictitious Employer
    J	= Converted (Justify)
    M	= RTM - Regional Tax Manager (Justify)
    O	= OIG
    R	= Random
    S	= Stratified

    
    NOTE: A source code showing that the audit originated from a B-27, a converted assignment, or a Regional Tax Manager assignment requires a justification in the Comments section of the C-51.
    
    
30. No. of misclassified workers: The number of misclassified workers as shown on Schedule 3. Misclassified workers are unreported worker(s)/wages discovered as a result of the audit. Important: This number can’t be greater than the total number of employees (#28) for the year(s) audited.
    
    
31. Wages for misclassified workers: The wages for misclassified workers as shown on Schedule 3. These are wages paid to unreported worker(s)/wages discovered as a result of the audit.

32. Auditor Number: The Auditor number for the auditor who conducted the audit. The auditor is not required to sign the report.
    
    
33. Report Date: Enter the date the audit report and work papers are completed.
    
    
34. Reviewed By: The supervisor who reviewed the audit program will enter their supervisor ID number to indicate the audit report was reviewed.
    
    
35. Score: The audit program will enter the supervisor score from the audit review form. The points for each activity are indicated on the audit review form.
    
    NOTE: All errors noted must be corrected. The supervisor's score will not be used by Field Tax Operations for review purposes.

DATA ENTRY:

36. Pre-audit Discussion: Enter the name, title, and telephone number of the individual(s) with whom the pre-audit discussion was held. Indicate if the interview was by telephone or in person. The discussion must be held with the owner, partner, corporate officer or designated representative.
    
    If the pre-audit discussion is held with a designated representative, such as a relative, bookkeeper, accountant, controller, or CPA, the Auditor must identify:

37. Was the audit performed on employer's premises? Check the appropriate block to indicate if the audit was performed at the employer's location. If no, indicate how the existence of the business was verified. Methods for verifying the existence of the business are:

38. Person Providing Records: Enter the name, title, and telephone number of the person who provided records for the audit. If the records are provided by a designated representative the audit must identify the name, title and telephone number of the designated representative and the name, title and telephone number of the owner, partner or officer who designated that representative.
    
    If that information is the same as the information in the Pre-Audit Discussion the examiner may enter the phrase "same as item 36".
    
    
39. Were records acceptable? Did the employer records conform to the requirements of TWC Rules 815.106? If Yes, skip question 40. If No, explain in question 40.
    
    
40. Describe record deficiencies: Describe any deficiencies in the records. Examples: social security numbers missing, checks missing, dates of provided services missing, explanations for payments not adequate, etc.
    
    
41. Rule 6 explained? Check to indicate if Rule 6 (TWC Rule 815.106) was explained to the employer/representative. If question 39 indicated the employer’s records were not acceptable, and Rule 6 was not explained, the auditor MUST enter comments to explain why.
    
    NOTE: Item number 41 must be answered regardless of the answer in number 39.
    
    
42. Correctly reported by the employer? Check the appropriate block to indicate if the employer properly reported the following items. Enter NA if an item does not apply.

43. Reports attached: Attach audit schedules and complete this section of the C-51.

44. Post-audit Discussion: Enter the name, title, and telephone number of the individual with whom the audit results were discussed. If this person is not an owner or an officer but a "designated representative" and was not previously designated for the pre-audit discussion, list the name, title, and telephone number of the designated representative, and also indicate the name, title, and phone number of the individual who made the designation. (Note: If this information is the same as that listed in item #36, then "Same as #36" may be entered.)
    
    Note: The Post-Audit discussion can be done by phone.
    
    IMPORTANT: If the audit results in additional tax the post-audit discussion must be held with an individual that is authorized to make payment for the business being audited. If this is not possible the audit documentation must explain why. Acceptable statement: Employer was asked for payment but will pay when billed. Reference: Chapter 7 - "TPS Acceptance Sample Rationale", question #8 for additional information concerning post-audit discussion when employer owes additional tax.
    
    
45. Audit results accepted? Check the appropriate block to indicate if the employer accepted the audit results. If No, explain in the Comments & Narrative section.
    
    
46. Forms Prepared: Based on the audit results the program will indicate if a Status Report, FL-92, C-102, C-5, C-7, C3, C4 or other document (identify document) was prepared or submitted. If forms C-5/C-7 or C3/C4 are prepared, the program will display the form and indicate the quarter/year prepared. Note: Copies of all adjustment reports must be included in the audit work papers and attached to the C-51, and forwarded to state office as appropriate.
    
    
47. Money collected: Enter the amount of money collected.  If the collection is less than the balance due, an explanation must be made about why full collection was not accomplished.  Remarks that indicate WILL PAY WHEN BILLED OR NO ACTION TAKEN to collect money owed will not fulfill this requirement.  Minimum acceptable statement "Employer was asked for amount due and stated will pay when billed".
    
    
    • If the amount due is $5 or more, the Accounts Examiner must inform the employer of the amount due and make an attempt to collect the money. If the employer did not make full payment, the AE must explain why full collection was not accomplished.
      
      
    • If the amount due is less than $5, the Accounts Examiner must inform the employer of the amount owed. The AE may collect the amount due, however a collection attempt is not required. The AE should inform the employer that the amount due may be paid when submitting the next quarterly report.
      
      
48. In Compliance: Mark the appropriate box to indicate whether the employer is in compliance with the TUCA. If the answer is No, provide comments in the Comments & Narrative section explaining why.

Use this section to provide additional information or comments regarding any of the previous answers. The Comments section should be used when:

A blank copy of the C-51B - Field Audit Report (Continuation) is located in the Appendix Section of this manual.

The information below corresponds to numbered items on the Form C-51B - Field Audit Report (Continuation). This form is used when the audit meets the expand audit criteria. Reference: Chapter 1 – "Tolerance⁄ Expanding the Audit" for additional information.

Items 1 to 4 are downloaded from the Tax system.

1. Tax Area: the Auditor's 2-digit Tax Area number.
   
   
2. Auditor No.: Auditor's AE ID number.
   
   
3. Employer's TWC Account No.: The employer's 9-digit account number.
   
   
4. Employer: The employer's account styling (line 1 of EMF) and the employer's zip code. If truncated by audit program, auditor is not required to complete.

QTR/Yr, Tax Rate will be automatically entered for each expanded year of the audit.

* * * * * Items 12 to 23 are automatically entered from data in the program. * * * * *

12. Audited Total Wages: The total wages audited for each expanded quarter audited.
    
    
13. Underreported Total Wages: The total wages underreported for each expanded quarter audited.
    
    
14. Audited Taxable Wages: The taxable wages audited for each expanded quarter audited.
    
    
15. Underreported Taxable Wages: The taxable wages underreported for each expanded quarter audited.
    
    
16. Audited Tax: The tax audited for each quarter expanded quarter audited.
    
    
17. Underreported Tax: The tax underreported for each expanded quarter audited.
    
    
18. Reported Total Wages: The total wages reported by the employer for each expanded quarter audited.
    
    
19. Overreported Total Wages: The total wages over reported by the employer for each expanded quarter audited.
    
    
20. Reported Taxable Wages: The taxable wages reported by the employer for each expanded quarter audited.
    
    
21. Overreported Taxable Wages: The taxable wages over reported by the employer for each expanded quarter audited.
    
    
22. Reported Tax: The tax reported by the employer for each expanded quarter audited.
    
    
23. Overreported Tax: The tax over reported by the employer for each expanded quarter audited.

Multi Year Totals

This section displays the totals for each item in the expanded audit year(s).

Comments & Narrative (Continued)

Use this section to provide additional information or continue comments from Form C-51 Field Audit Report. Reference: Chapter 4 – "Comments & Narrative section of the C-51" for additional information.