Is Your Auditor M.I.A.?
Where is the auditor? I haven't heard from him or her in a while. Should I call them? Or should I just wait it out, and see if they contact me again?Have you ever asked yourself those questions?
Some taxpayers have an audit begin where the auditors come to their place of business, ask questions, review records, and then leave. When the auditors leave, they say they will let the taxpayer know if additional information is needed or if they have any questions.Then, months go by without any contact from the auditor.But wait, three weeks before the statute of limitations is about to expire on one of the tax years within the audit period, the state contacts the taxpayer and asks the taxpayer to sign a waiver of the statute of limitations, usually a year extension (you should always attempt to negotiate a smaller extension; 3 months if you can get it; some states have a minimum of 6 months).After the extension is signed, the taxpayer may receive another information request or list of questions from the auditor, with a short timeline or due date for the taxpayer to respond. After the taxpayer responds, another 6 months go by without any contact from the auditor.
Then, once again, one month before the statute of limitations is about to expire, the taxpayer receives a preliminary audit assessment. This time the state won't extend the statute, and the taxpayer has less than a month to dispute the audit assessment's findings before a final assessment is received.QUESTIONS
If your auditor goes M.I.A. in the middle of an audit, what should you do?
Should you just play the "wait and see game"? Or, should you contact the auditor sooner to find out what the status is?
If you contact the auditor sooner, you may or may not receive a response earlier? It really could go either way.
The same is true if you don't contact the auditor. You could get "lucky" and the statute of limitations could expire without receiving an assessment. On the other hand, you could receive an audit assessment with a short amount of time to respond.
What do you think? Have you experienced this before? If so, what was the result?
Please comment or e-mail me at firstname.lastname@example.org. Any response will be kept confidential.
Brian Strahle is the owner of LEVERAGE SALT, LLC where he provides state and local tax technical services to accounting firms, law firms and tax research organizations across the United States. He also writes a weekly column in Tax Analysts State Tax Notes entitled, "The SALT Effect." For more info, visit his website: www.leveragestateandlocaltax.com
You can reach Brian at email@example.com.
Because state and local taxes are deceptively simple and endlessly complicated.