Litigation before Texas State Office of Administrative Hearings
Representation for Tax Controversy Matters in Texas
Taxpayer problems usually begin when they receive a notice from the Texas Comptroller, which indicates that the Comptroller intends to conduct a Pennsylvania tax audit on them or their business. It is often wise to contact a tax professional 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 Texas tax audits. Even if the audit is handled expertly by the CPA or tax department, the Texas Comptroller may still take aggressive positions against the taxpayer or may simply be unreasonable. After the assessment is issued, one can protest or challenge the assessment of the Texas Comptroller and if this is not done, then amount you owe becomes final. At this point you can still ask for 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 an audit cannot get resolved during the agency protest process, it proceeds to hearing.
A Tax Professional can help you settle your case
During the hearing, the case is heard by an administrative law judge under the Office of Administrative Hearings (SOAH). Just as the taxpayer is represented by a professional, like a team member at Texas Sales Tax Helper, the Comptroller is represented by the General Counsel’s office. Having a qualified representative involved on the Comptroller’s side often leads to more favorable and reasonable settlements. Similar to a court proceeding, oral testimony is presented, witnesses testify under oath, and a proposed decision is issued with 30 days of the written submissions. A large percentage of litigated cases are settled without a final court decision. Following the outcome of the SOAH proceeding, the case can be appealed to District Judicial Court.
To find out how tax controversy may be the tool needed to successfully resolve your tax problems, contact a qualified tax professional from our firm today.
Texas Sales Tax Audit FAQs
You inadvertently waived a red flag or your company landed in the small percentage selected for a random Texas sales tax audit. These red flags include: cash-based businesses, prior audits that resulted in owed sales tax, your sales reported to the state didn’t match what you reported to IRS, a high volume of exempt sales, filing a refund claim or a high number of credits. There’s also a possibility that your business happens to be in an industry that your state suspects rampant under-reporting. Often times, they will target industries effected by complex sales tax laws. Learn More
1. RESPOND to the notice
2. Get organized
3. Identify/Hire your audit manager
4. Notify your auditor of who they will be corresponding with
5. Compare your sales tax returns against the federal tax return
6. Test at least one month of exempt sales
7. Reconcile your sales tax payable account versus your sales tax payments
8. Review your fixed assets purchased, did you pay sales tax on them?
9. Review your purchases on your key expense accounts to ensure tax was paid on your purchases
10. Look at our complete list that explains these steps in more detail: here
Audit duration can vary dramatically from state to state and from business to business. Waiver issues aside, an audit generally takes 3-7 months to complete. Surprisingly, some audits can drag on for a few years. Time factors usually swing on the size of the company, the ability to produce reliable and organized documentation, and the level of sophistication of the business.
We all enjoy the occasional DIY project especially when it saves us money, am I right? Before opting to go that route, consider the risk vs. rewards involved. Avalara recently conducted a study and found that the average sales tax audit costs around $115,000. When facing a sales tax audit it is beneficial to have the expertise of the financial implications on your side. That is where Sales Tax Professionals such as SalesTaxHelper can save you a lot of heartache and money by avoiding a few missteps. Learn More
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