Sales and Use Tax Audit Assistance
Sales and use tax audit assessments are often very expensive, particularly if you and/or your advisors do not have prior experience in managing them. If you choose to handle them yourself, you will likely also find them to be quite demanding in terms of time diverted away from your core business. Theoretically, a sales tax auditor’s job is to determine the amount of tax that was legally due and then subtract what was paid to arrive at either the taxpayer’s net assessment or a net refund amount. Such rarely, if ever, occurs. Generally, sales tax auditors, first and foremost, are there to generate a significant audit assessment. Any grey area issues and anything that requires any work to understand will inevitably be interpreted in favor of assessing tax. With respect to identifying offsetting overpayments, auditors rarely review transactions on which tax was paid. In addition, sales and expenses are usually reviewed on a sample basis and the auditor will be inclined to structure the sample population to the benefit of the taxing authority. All these variables generally result in an inflated audit assessment that also includes penalties and interest at the highest statutory rate.
Our professionals have significant experience representing clients in sales and use tax audits. We know the various ways in which audit assessments can be inflated and what alternatives are available for minimizing them. We will tenaciously challenge items erroneously deemed taxable on the audit work papers based on his knowledge of sales and use tax laws. Where additional documentation is needed to sustain exempt or non-taxable treatment, we will work to obtain such. We will also challenge the assessment of penalties and advocate for statutory minimum interest. To the extent there are material issues of disagreement that cannot be resolved with the auditor, we also have significant experience resolving issues with persons of higher authority within revenue departments and/or via administrative appeals processes.
Goldfine can effectively handle sales, use and transaction audits from start to finish or alternatively can start representation at any time after it becomes clear what the auditor plans to assess. The primary benefit of getting good representation early is that Goldfine can represent your interests in the sample selection process and can also work to minimize the number of items that get listed as taxable in the first place. It is generally easier to get items excluded from audit work papers in the first place than to get them removed once they have been included.
Fees for audit assistance work are typically based on the number of professional hours required to perform the work. We are always conscientious of the cost/benefit equation. Many audits eventually reach a point where the cost of continuing to dispute remaining issues would likely exceed the probable benefit at which point we would communicate such situation and recommend speedy settlement of the audit.