Dino Marcaccio
President
Former Texas Comptroller State Tax Auditor
ISSUE AT HAND
- State auditor interviewed taxpayer (TP) without proper representation by an experienced sales tax consultant.
- State auditor lacked Texas tax code/tax policy knowledge, almost costing a Texas taxpayer approximately $1.2 million in an incorrect sales and use tax assessment.
- Texas Tax Group was not engaged until the State auditor completed the audit.
SOLUTION
- Experienced Texas Tax Group consultant, who knew the Texas Tax code and the Comptroller policies (e.g., asked for Redetermination extension), was hired to defend taxpayer.
- Texas Tax Group consultant obtained valid resale certificates from client vendors.
- Texas Tax Group team worked on many fronts to defend client through the entire process.
AUDIT JOURNEY
Texas Tax Group (TTG) works with small taxpayers and large companies to defend their Sales & Use tax audits. This story is how TTG defended a large building material retail company AFTER the Comptroller audit was completed and the taxpayer had received a bill. This is another example of why TTG should be your trusted partner when facing the State Comptroller and all its resources. TTG reduced the original tax assessment by approximately $800 million.
The main job of State Comptroller tax auditors is to find uncollected sales and use tax. Unfortunately for taxpayers, auditors often make mistakes, whether from being undertrained, overworked, having an overly aggressive supervisor’s stance on “taxing everything,” or all of the above.
When this large retail company finally engaged Texas Tax Group, the Comptroller had completed the audit for 20141Q through 20173Q and sent a tax bill for $1.2 million tax due November 2019. The taxpayer had tried managing the entire audit process with no help from a consultant experienced in defending sales tax audit results. The taxpayer also thought it was too late to turn the clock back.
Texas Tax Group can and has successfully defended numerous audits AFTER the taxpayer has received a tax due bill. IT’S NEVER TOO LATE. This taxpayer had been contacted previously but did not see a need for the Texas Tax Group services until after the audit when they received a massive tax bill.
TTG management assigned Rifat to the client audit, a TTG consultant who had previously worked eight years for the State Comptroller. He next met with the TTG management and the client representative.
Rifat analyzed the taxpayer history to prepare for the pre-audit reconciliations and reminded the TP to include the work papers for credits and use tax filed within the audit period. TP uploaded the sales journal records, and Rifat found significant differences in reporting for the first part of the audit period. Rifat sent the TP an email with questions and requests for updated records.
The consultant spoke with the State Comptroller auditor to request the statutory-based extension and worked on the audit timeline. After experiencing no responses and pushback, Rifat then requested a Managed Audit. Interest and penalty were waived when the Managed Audit was approved.
Rifat requested and received corrected resale exemption certificates, updated invoices, identified non-taxable material and services, and submitted them to the auditor for review in response to the audit findings.
Rifat then contacted the client rep to get their acceptance of the final assessment and provided instructions for paying off the final amount after confirming the process with the auditor.
At a post-audit review with the client, Rifat outlined ways to best prevent similar audit-related issues from occurring in the future.
Dino Marcaccio, President (ex-Texas Comptroller Auditor, 16 Years)
TEXAS TAX GROUP, INC.
9950 Westpark Drive, Ste 430
Houston, Texas 77063
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