Handling Texas Sales Tax Audits And Appeals

Handling Texas Sales And Use
Tax Audits And Appeals
Dallas CPA Society
Convergence 2013
Presented By:
Stephen Hanebutt, CPA
Sales Tax Specialists of Texas
Tona Luna
Manager, Audit Division
Comptroller of Public
Accounts
1
Handling Texas Sales And Use
Tax Audits And Appeals
Prior to fieldwork beginning
¾ Complete
the audit questionnaire
¾ Provide Power of Attorney ( POA)
¾ Discuss the use of Electronic Records
2
Handling Texas Sales And Use
Tax Audits And Appeals
Prior to fieldwork beginning
¾ Determine
if Taxpayer wants and is eligible for a
Managed Audit
¾ Taxpayer
¾ Must
¾ Prior
must have an audit history
be requested within 30 days
audit must have taken the auditor at least 80
4
hours to complete
Handling Texas Sales And Use
Tax Audits And Appeals
Prior to fieldwork beginning
¾ Provide
documents requested by auditor
¾ Federal
tax returns
¾ Sales tax payable account detail
¾ Bank statements
¾ Depreciation schedules
¾ Chart of accounts
¾ Resale/exemption certificates
5
Handling Texas Sales And Use
Tax Audits And Appeals
Prior to fieldwork beginning
¾ Control
what the auditor sees
¾ Determine
where the bulk of the fieldwork will
take place
¾ Taxpayer’s
site
¾ CPA’s office
¾ Auditor’s office
6
Handling Texas Sales And Use
Tax Audits And Appeals
Prior to fieldwork beginning
¾ Get
resale/exemption certificates in order!!!
¾ Elements
required for exemption certificates
¾Name
and address of the purchaser
¾Name and address of the seller
¾Date and signature of the purchaser
¾A description of the item to be purchased
¾The reason the purchase is exempt from tax
(exemption only)
¾Sales tax permit number for purchaser (resale only)
7
Handling Texas Sales And Use
Tax Audits And Appeals
Prior to fieldwork beginning
¾ Timeline
¾ Prior
to entrance conference
¾ From
entrance conference through 60-day period
after notification granting Redetermination Hearing
¾ After
60-day period
10
Timeline For
Certificates
Prior to
Entrance
Conference
Entrance
Conference
1st
Period
Exit
Conference
Notification
of Audit
Results
Redetermination
Hearing Request
(SOG)
2nd
Period
60-Day
Letter
61st Day
3rd
Period
Handling Texas Sales And Use
Tax Audits And Appeals
During the Audit
¾Document
communications with the auditor –
email
¾Tick
and Tie – review the auditor’s work
12
Handling Texas Sales And Use
Tax Audits And Appeals
During the Audit
¾ Treat
the auditor with respect in a nonconfrontational manner
¾ Waiver of statute – request interest waiver
¾ Research sources
¾ STAR http://cpastar2.cpa.state.tx.us/tri_open.html
¾ Tax
help http://www.window.state.tx.us/
¾ Audit manuals and other Audit Related
Information http://www.window.state.tx.us/taxes/audit.html
17
Handling Texas Sales And Use
Tax Audits And Appeals
Post-fieldwork
¾
Talk to the auditor’s manager/supervisor (Reconciliation
Conference
¾
IARC (Independent Audit Review Conference) –
schedule prior to Exit Conference
¾
Exit Conference
18
Handling Texas Sales And Use
Tax Audits And Appeals
Post-fieldwork
¾ Settlement
Discussions
¾ Field
Manager is involved
¾ Opportunity to decrease liability prior to
Redetermination Hearing
¾ Limited to issues involving Penalty and Interest
19
Handling Texas Sales And Use
Tax Audits And Appeals
Post-fieldwork
¾ Notification
of Audit Results letter will be
sent
¾ 30
days to respond
¾ Request Redetermination Hearing
¾ Provide Statement of Grounds
20
Handling Texas Sales And Use
Tax Audits And Appeals
Post-fieldwork
¾Redetermination
¾District
Hearing
Court
21
Handling Texas Sales And Use
Tax Audits And Appeals
Questions?
22