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What you need to know if you're facing an audit in Georgia...
Have you received a letter from the Georgia Department of Revenue notifying you that you have been selected for a sales tax audit? Have you simply received a phone call from a Georgia tax auditor asking seemingly harmless questions about your business and how you handle Georgia sales taxes? However you have been contacted, a Georgia Sales Tax Audit can target the last 3 years of your business activity and even farther back if sales and use tax returns have not been filed. Even a minor error on a type of transaction, when multiplied over three years, can add up to a considerable amount of sales tax liabilities. Often times a sales tax audit can be a “gotcha tax audit” and simply not having the correct paperwork can result in a huge assessment.
In Georgia, a sales tax audit begins by the Department notifying the company that it has been selected for audit. From there, an initial meeting is set to discuss the nature of the business that has been audited. After an audit plan is developed, the auditor will perform an examination by comparing the taxpayers books and records to the items reported on the sales tax return. Upon completion of the examination, the Department will issue a report with adjustments. It is important to know that you have the right to have a professional represent you during your audit by completing a power of attorney form.
An advantage of working with our professionals is that we are often aware of issues that cannot be resolved with the sales tax auditor and need to be protested. Knowing which issues cannot be resolved often result in a more efficient resolution of the case. Our regularly handle administrative protests, administrative and tax court filings, and appeals against state revenue agencies.
If you disagree with the adjustments that cannot be resolved with the auditor, a notice of the proposed assessment is issued. It is critical that if you wish to protest the proposed assessment, you must do so within 30 days. Protests of contested Georgia sales tax assessments can be completed on the Georgia Department of Revenue’s protest form.
If the issue cannot be resolved informally with the Georgia Department of Revenue, a case can be filed by the taxpayer or his lawyer in the Georgia Tax Tribunal. The Tax Tribunal provides an independent review of the Department of Revenue in tax disputes. While it is not required, it is often advisable to have a qualified professional handle your case in Georgia’s Tax Tribunal.
The trying, grueling and exhausting process of a Tax Audit is finally over. But what happens if you do not agree with the outcome of the audit? On top of taxes, the auditor also calculated penalties and interest to add to the money you don’t owe, or you cannot afford. Sometimes the overinflated assessment is a result of poor auditing techniques. Other times a large assessment can result in the audit double-dipping or using bad periods for your business to predict other periods. Many times, there is a discrepancy as to whether your business is even selling taxable items or services, or you just could not produce records timely enough to prove the taxability of certain items. There may even be a controlling case that even the tax auditor is unaware of. Fortunately, state and local tax consultants and other professionals can challenge the findings in some way.
Even most good tax professionals out there do not deal with taxes enough to really know the ins and outs of both the tax laws and the administrative procedure of fighting an audit assessment. Our firm primarily handles state and local taxes and is used to the ins and outs of the issues and the procedures to help reduce your assessment. As state and local tax lawyers, we challenge the Department of Tax and Fee Administration and other state agencies on a regular basis. We often assist with audits, protests, and resolving tax disputes at the administrative court level. Simply put, this is what we do each and every day.
Contact our offices for a FREE INITIAL CONSULTATION with a consultant with experience in state and local tax matters. During our consultation we will review your tax audit and discuss ways in which we can get you the results you are looking for. We regularly are able to reduce the tax, penalties and interest. Whether you hire our firm or not, we offer a quick and honest evaluation, so you can proceed as you deem fit. To get your tax, penalties and interest reduced with the Department of Tax and Fee Administration.
Defend Your Rights at All Stages?
The Audit – the end of an audit results in a sales and use tax audit report, which lays out the auditor’s findings. If you cannot agree with the auditor on the findings, a notice, such as a Notice of Determination, will be issued. Auditors are often trained to take a shotgun approach and the notice of field report or investigation can be alarmingly high. It is not time to hit the panic button yet! The report along with audit findings gives you a detailed road map of what the auditor thinks is taxable and, if you know how to understand the document, what you need to do to challenge the assessment. If you or your accountant have handled the audit to this point, now is the best time to bring in a consultant experienced in Tax Controversy for a free consultation and to help negotiate on your behalf with the auditor.
REQUEST TO EXTEND THE STATUTE OF LIMITATIONS: Even after the auditor issues the audit report, the audit still may go on. A supervisor in the state’s revenue agency may decide additional work needs to be done or additional transactions are subject to tax. However, the Statute of Limitation period is still running, and the auditor may request an extension of time. You may be giving up valuable rights by agreeing to extend or waive the statute of limitations and you should consult with an expert before agreeing to waive any of your rights.
PROTEST THE AUDITOR’S ASSESSMENT: After the audit and the audit report has been issued, the next official step for the agency is to formally issue the auditor’s proposed or final assessment. Once issued, the assessment must be challenged within a short timeframe, usually 30-60 days. Such a deadline is critical, and you may give up important rights by not fighting the audit within that timeframe If you have received a NOD and have not at least talked to someone experience in State and Local tax, now is the time before you are out of time. Following the outcome of the agency appeal process, the next step is to challenge in administrative or tax court.
NEED TO MAKE AN OFFER TO SETTLE YOUR TAX LIABILITY? During the redetermination period the agency will entertain offers to settle the case. Often times, you can get better results here than with the auditor. If you or your professional seldom does state and local tax work, it might be difficult to evaluate fair versus unreasonable settlements. DO NOT try to negotiate a settlement without an experienced state and local tax consultant.
FILE A FORMAL PROTEST WITH THE IN ADMINISTRATIVE OR TAX COURT : If you cannot get the case resolved with agency then you may have to file in the Administrative or Tax Court Administrative or Tax Court is often a more efficient way for taxpayers to avoid having to go the more expensive judicial court route. However, this is a court-like proceeding, and while not required, you really should have a state and local tax consultant handle the case..
CONTEST A JEOPARDY ASSESSMENT: The state may issue a Notice of jeopardy Determinations in certain situations. The jeopardy assessment gives the agency some accelerated rights and may immediately begin to try and collect. Due to the jeopardy nature, the taxpayer only has 10 days to contest the assessment and must place a security deposit to fight the issue.
You may, within the time allotment indicated on the notice, apply for an administrative hearing, but this does not stop collection activity.
OFFER IN COMPROMISE: Most state agencies allow offers in compromise. An offer in compromise is a different procedure because it usually requires a final tax liability and an offer to settle that liability for some lesser amount. To qualify for the OIC program, states usually have specific guidelines, such as a closed account (ie-liability outstanding), you are not disputing the liability in the agency or in the court, you are not currently in bankruptcy, and you are unable to pay the full amount.
Taxpayer problems usually begin when they receive a notice from the Georgia Department of Revenue, which indicates that the Georgia Department of Revenue intends to conduct a tax audit on them or their business. It is often wise to contact a tax consultants to be sure you know your rights and to ensure the auditor has overstepped its bounds.
Businesses will often utilize their CPAs or, occasionally, in-house tax department to handle tax audits. Even if the audit is handled expertly by the CPA or tax department, the Georgia Department of Revenue may still take aggressive positions against the taxpayer or may simply be unreasonable. After the Notice of Proposed Assessment is issued, one can protest or challenge the assessment of the Georgia Department of Revenue and if this is not done, then amount you owe becomes final. At this point you can still ask for a reconsideration of the assessment in the form of a settlement negotiation. When settlement negotiations are not working during or after the audit, then the taxpayer has a small window of time to use the only other means of getting a just result – controversy. If a taxpayer does not file a complaint or petition within 30 days of the final assessment, then the ability to litigate or even protest their tax debt becomes much more difficult.
Sales Tax Helper has worked for over five decades of cumulative experience in assisting taxpayers who need to litigate their tax matters to get just results. Our firm focuses on the tough situations, the times when hard-hitting actions are needed to take a negative situation and get the very best out of it. Additionally, we work with CPAs and tax consultants whose clients need aggressive legal help when dealing with the Georgia Department of Revenue or other tax authorities. In fact, we have found that is not uncommon for the start of the controversy process to be the most effective settlement tactic the taxpayer has.
A Tax consultant can help you settle your case
When a taxpayer sues the Georgia Department of Revenue, it can change how the Georgia Department of Revenue views a tax situation, sometimes dramatically. The litigation department of Georgia Department of Revenue may decide that the issue an auditor was so worked up about is not a viable issue to litigate. Alternatively, the litigation department might view the potential consequences of losing the case and being bound by the decision for all other taxpayers. Under the right circumstances, this can make settlement negotiations much easier and more successful once litigation has begun. If our tax consultants bring your case to litigation, the DOR’s ability to reach a compromise changes, which may be used to your business or your client’s advantage. Additionally, a large percentage of litigated cases are settled without a final court decision.
To find out how tax controversy may be the tool needed to successfully resolve your tax problems, contact a qualified tax consultant from our firm today.
The right professionals can point out opportunities for tax savings, reduce future audit exposure and get back sales tax you shouldn’t have paid.
As a business owner, planning can be critical in the management of state and local taxes. Failure to diligently manage, comply, and plan for state taxes can result in harsh back taxes out of your pocket along with penalties and interest.
Business transactions, whether routine (e.g. a standard sale to a customer) or infrequent (e.g. purchasing new business facilities) can be structured to save a significant amount of taxes. All it takes is taking the time to plan ahead with the right professionals on your team.
Specific business transactions can also be riddled with tax minefields or present tax savings opportunities. Most states have specific rules for purchases of aircraft, art, and motor vehicles. Proper structuring can result in huge state and local tax savings. Many states also have broad manufacturing-related exemptions.
If your business has made large purchases of machines, or repairs of those machines it is important to avoid state and local taxes or seek refunds for taxes paid. As sales tax are often an afterthought, it is often wise to have a sales tax professional on your team before the transaction happens.
A sales tax professional from Sales Tax Helper can consult with you on correct tax procedures to make sure you pay as little sales tax as possible and recoup sales tax you should not have paid. Further, our firm can also help you in the calculation and record keeping your taxes but can also assist you in legally reducing your tax liability. Your company goals are important, and, with our services, we strive to help you meet them in the most tax-effective method possible. Please realize that by taking the necessary steps to ensure you have a sound tax planning strategy and proper execution.