Dino Marcaccio
President
Former Texas Comptroller State Tax Auditor
The Managed Audit Program (MAP) was initiated by the Texas Comptroller’s Office in 1999 in order to allow qualifying businesses to conduct quasi self-audits with minimal input from the Texas Comptroller’s Office. The benefit to the Comptroller’s Office and the State are significant cost savings because less resources are being expended. The numerous business benefits are listed below.
Audit Completion Time Significantly Reduced
Time is money and reducing the time spent on a state tax audit is important. An average Texas Comptroller Sales Tax audit can last six months or more and require a significant number of hours to be expended by the business under audit.
Auditors sent to conduct the larger scale audits are often not experienced and can make mistakes in the development of the CAMS (Computer Assisted Menu System) Sample Program(s) which can result in over assessed, inaccurate and lengthy tax audits.
Self-Audit – Best Outcome Scenario
The Managed Audit Program (MAP) allows the business (or representative) to take a direct role in the audit process from beginning (i.e., verifying accounting controls, confirming trial balances, setting up and evaluating sample populations) to the end (i.e., evaluating taxability of detail or sample test transactions, meeting MAP deadlines, etc.). During a Managed Audit, the business is in the driver’s seat and that usually means a ‘best outcome’ scenario. Although the auditor has the right to evaluate all aspects of the audit, there is no doubt that the managed audit simply results in a more accurate audit outcome.
Waiver of Penalty and Interest
This is a big benefit. Standard penalties (10% of tax due) and interest charges (Primere Rate + 1%) will be waived if all of the MAP rules are followed and the timeline (click for sample) is met. Even if various deadlines are not met, then the Comptroller will allow a certain amount of flexibility without losing the waivers (see attachment 4). Note: No waivers will be granted for any tax that is collected and not remitted.
Credits and Refunds – Overpayment of Sales & Use Tax
The Managed Audit Program allows for ALL over-payments (or accruals) to be included as a credit or refund in the audit. With over 350 years of experience working as auditors, Texas Tax Group has what it takes to identify, research and confirm any over-payments due to the client. Being subject to a self-audit is actually an opportunity to review all relevant purchases to check for over-payments of sales tax.
Identification of Sales & Use Tax Errors (Sales and/or Purchases)
Texas Tax Group will assist in the identification of any definitive or questionable areas of sales & Use Tax exposure (sales and purchases). If Sales & Use ‘tax due’ errors are found, then Texas Tax Group will assist the client with developing policies and procedures to address these areas of concern.
Deadline to Request a Managed Audit
Interested taxpayers should request a Managed Audit within 60 days of the date that the Audit Notification Letter was sent. The request should be sent in writing directly to the Manager of the Audit Office assigned to the audit (i.e., Dallas West Audit Office, Houston North Audit Office, etc.). The Audit Division will approve or deny the Managed Audit request within 30 days of the request.
MANAGED AUDIT – Development Stages
- Identification of populations.
- Identification of accounts of interest.
- Verification of population bases.
- Selection of samples in accordance with Comptroller guidelines.
- Analysis of samples in accordance with Comptroller guidelines.
- Approval of sampling approach and Issuance of Notification of Sampling Procedures.
More information regarding Managed Audits can be found in:
2 – Managed Audit Publication (2015): Texas Comptroller’s Office
3 – Texas Comptroller – Audit Policy (AP) Memo 92 (dated Dec 10, 2002)
4 – Tax Rule 3.282 Managed Audit
(a)(1): A taxpayer self-review and analysis of invoices, checks, accounting records, or other
documents or information to determine a taxpayer's liability for tax under Tax Code, Chapter
151, as allowed under a written agreement with the comptroller authorizing a managed audit as
described in subsection (f) of this section.
(f) The comptroller may authorize taxpayers that meet certain requirements to perform managed
audits.
Everyone interested should take the time to read Tax Rule 3.298 – AUDITING TAXPAYER RECORDS. This Tax Rule was last amended in 2013 and contains numerous sub-sections related to a MANAGED AUDIT.
To find out if you qualify for a MANAGED AUDIT with all Penalties and Interest waived, call 1-855-892-8348.
