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COST Sales Tax Conference
OrlandoFebruary 25, 2015
Deb ElmoJOHNSON & JOHNSON
Jim McGowanSTAPLES
Kevin S. BerryGE
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Best Practices Transaction Tax Audits
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OVERVIEW
Best Practices Audits
Preparing for an audit
Dealing with auditors and requests for information
Handling disputed issues / assessments
Effectively resolving protests
Communication
How to communicate the effectiveness of Audit Team to upper
management
How to get recognition for Audit Team’s efforts
Has your company ever refused to sign a waiver requested by a taxing
jurisdiction?
A. Yes
B. No
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Yes No
0%0%
5
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BEST PRACTICES
Preparing for an AuditVerify audit notification details (Taxpayer/Audit Period/etc.)
Be aware of your company’s statute waiver policy and Statute of
Limitation issues
Review list of documents auditor is requesting
Review returns
Review results of prior audits / Have prior issues been corrected?
Understand potential under and over payment issues
Evaluate whether audit can be resolved more efficient manner
Has your company been asked to do a computer assisted state transaction tax
audit?
A. Yes, we gave the state the file they requested.
B. Yes, however, our company was unable to comply.
C. No – never was asked to do a computer assisted audit.
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Yes, we ga
ve th
e state th
e ...
Yes, howeve
r, our c
omp...
No – never w
as ask
ed to ..
0% 0%0%
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BEST PRACTICES
Dealing with audit requests for information All requests for information need to be in writing
Establish timelines and expectations
Pay attention to waivers and the dates - Push back
Answer all requests truthfully – If you don’t know the answer find out
before answering “off the cuff”
Only answer “the question” asked and document what you give to
auditors - Don’t say too much
Be aware of systems abilities and computer assisted audit requests
Dealing with difficult information requests (Apportionment/etc.)
How does your company handle post-audit protests?
A. Handles internally.
B. Hires outside assistance.
C. Strives to resolve at the audit level and never appeals audit issues.
D. All of the above.
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Handles intern
ally.
Hires o
utside assi
stance
.
Strives t
o reso
lve at
the a...
All of t
he above.
0% 0%0%0%
5
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BEST PRACTICES
Handling disputed issues / assessmentsAlways work on issues at the audit level first (move up chain of
command – i.e. supervisor and up)
Confirm Statute of Limitations on issues. Closely read all notices
and know your deadlines
Use all available resources – inside and outside specialists.
Internally communicate issues and potential financial impact
(Tax+Penalty+Interest) as quickly as possible.
Make sure that business is properly reserved for potential impact of
issue
BEST PRACTICES
Effectively resolving protestsKnow your statutory deadline dates
Follow procedures strictly
Settlement is your friend – try and use it
Consider hiring local, outside firm
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BEST PRACTICES
Communicating Audit Results to ManagementCommunicate issues / exposure throughout the audit process
Surprises at end of audit = Bad Communication
Create audit closure report that includes audit error details
Communicate details to correct audience and ensure errors get fixed
Highlight potential audit issues avoided (scope reduction / negotiation / unbundling
/ proper application of law)
Tax savings / avoidance is best sales pitch for Audit Team
Communicate efficiency of audit efforts
Need to communicate both audit effectiveness and efficiency
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SUMMARY BEST PRACTICES
Proper Audit Preparation + Planning = Effective / Efficient Audit
Get involved and know your business
Resolve issues at lowest possible audit level
Know your audit remedies
Communicate potential audit issues and financial impact to
management as early as possible
Communicate results/details of audits and follow up to ensure that
errors / faulty processes are timely corrected
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