Case Studies
Beaufort County (SC) Business License/Employment Eligibility Compliance Audit
Situation Analysis:
All businesses located or operating within Beaufort County, South Carolina must apply for and maintain a Beaufort County business license.
The County had received complaints that certain non-complying businesses gained an unfair competitive advantage over complying businesses.
It was estimated that 80% of businesses in unincorporated Beaufort County did not have the required County business license. The Beaufort County Council mandated random audits of businesses in 2006. The program began in earnest in April 2008.
The County engaged Advance Point Global to conduct inspections to ensure the proper payment of business license fees and understanding of the fees and business license ordinances, and to determine compliance with applicable laws, ordinances and regulations.
Objectives:
Identify persons/entities engaged in business in Beaufort County that have not obtained the required license, and are more likely to engage in unlawful business practices.
Ascertain if licensed businesses have accurately reported their gross receipts and paid the appropriate license fees.
Ascertain if licensed businesses have completed and kept I-9 forms for all employees as required by the United States Government and Beaufort County.
Ensure equitable implementation of the business license ordinance.
Methodology:
The audits consist mainly of document inspections and examination of the business’s books and records to ensure proper reporting of gross receipts to the County and to ensure that the business is complying with federal employment eligibility verification and retention requirements. The process includes the following steps:
Verifying gross receipts documentation (business license fees are based on gross revenue) for the last three years (tax returns, filing statements).
Inspection and examination of company books and records.
Checking employee records for federally required documents.
Inspecting list of employees hired within past 12 months (payroll list, etc.).
Inspecting I-9 forms for each employee.
Results and Actions Taken:
Thanks to the information provided by APG in these compliance audits, Beaufort County has been able to identify businesses that were misstating their revenues or incorrectly classifying employees as independent contractors. These discoveries have resulted in increased license fee revenues because invariably the violators were paying less in fees than their revenues warranted. Also, any independent contractors discovered are being channeled through the licensing process and paying the appropriate fees, and contractors discovered to be illegal aliens are not permitted to continue as contractors.
In some instances, several businesses of the same type or classification were found not to be in compliance with certain ordinances. This indicated a lack of knowledge or understanding of the law within those business classifications, and the business owners were not aware that they were not in compliance. The County Administrator authorized APG to audit additional businesses in those classifications as a means of educating licensees and ensuring compliance with the law.
Approximately 890 businesses and 7,000 employee immigration (I-9) forms were audited in 2008. APG determined that approximately half of the forms checked in 2008 were incorrect or had errors.
Some of the infractions were due to minor mistakes, but others involved missing or misplaced information, unacceptable documentation of identity and/or work authorization. The audits have led to some employee arrests.
The audits conducted by APG have helped to root out instances of document fraud that can go undetected due to deficiencies in the federal I-9 program. Infractions discovered by APG auditors include duplicate A-Numbers (unique identifier assigned to each alien by the U.S. Department of Homeland Security), duplicate alien tax id numbers, and duplicate, fraudulent, or stolen Social Security numbers. APG found nine businesses with serious I.D. fraud issues involving 81 individuals in its first 100 audits.
Additionally, evidence produced by APG’s audits enables Beaufort County to file immigration violation charges against identified illegal aliens and launch the removal process under 287(g) authority.
Benefit(s) to Audit Subjects and Complying Businesses:
Inspections are performed to ensure proper payment of business license fees and understanding of the fees and business license ordinances, and to determine compliance with applicable laws, ordinances, and regulations. This has helped some businesses to avoid suspension or revocation of business license.
Employment eligibility can be a complex issue. APG’s compliance audits have helped to make sure that businesses are in compliance with employee documentation, and lessen the likelihood that local, state or federal government will take action against them.
Not all of the violations found would necessarily result in federal immigration charges of knowingly hiring illegal workers if discovered by ICE. In some cases the employers simply were not well informed about the requirements. But paperwork errors could result in fines in the event of an official ICE audit. The audits conducted by APG provide a service to employers by educating them on the rules and preemptively bringing them into compliance before they might come under federal scrutiny.
The audits are meant to be instructive, not punitive. But if a business doesn't comply, it could lose its county license. The audits help businesses avoid loss of license.
Other Case Studies
Advance Point Global has participated in numerous investigations wherein clients have required confidentiality agreements prohibiting disclosure of specific information relating to the investigation conducted. Therefore, client and subject names and other specifics have been omitted from the following case study narratives.
APG can, however, provide information of a general nature that will attest to the breadth and depth of experience of Principals and Associates and can further discuss this experience, if necessary, in private.