State Audit Defense
Opportunity: Sales and use tax audit activity is on the increase as states look for opportunities to increase revenues. Often, corporate accounting staff is too understaffed and unprepared to properly handle an audit, including how best to negotiate the audit sample selection and the audit defense. ThreeFive has over 80 cumulative years of State Department of Revenue, sales and use tax reverse audits and has successfully performed numerous audit defenses.
Implementation: ThreeFive will work directly with the Client in order to guide them and the auditor to an appropriate, fair and representative audit sample. Often, clients are confident in their sales and use tax compliance within certain accounts, but have confusion in other areas. ThreeFive will also assist in pulling and/or copying invoices, if so required by the auditor. This can result in a very large savings of corporate staff time.
After the preliminary audit findings are presented by the State, ThreeFive will consider the statutes as they apply towards the Client’s business activities. ThreeFive will then prepare understandable audit schedules in defense of the preliminary liability presented by the State and negotiate a resolution to the audit.
Result: Typically our clients receive a final audit report from the State which has significantly less tax due than the preliminary audit findings. Our fee is based on the savings resulting from the difference between the preliminary State audit schedules to the final State audit report.