NC Audit Help!

[kathyc2]

Good point. Even when they can't find any sales reporting discrepancies, they start poking around in Office Expense, Asset Purchases, and other locations to try and find candidates for Use Tax. Often that is more lucrative for them in terms of audit results, and they can chew up a lot of time on that part of the project.

Yep. IN business audits will always spend about 90% of time looking for use tax.

[Super Mom]

Thanks for the heads up on use tax, I was clueless about that!

I would normally 100% agree that developing a professional rapport is better than making them mad. I have already been through an audit with NCDOR on 2013 and 2014 with this client, that was all great and conducted very professionally. However, we are still waiting for the letter stating that's cleared.

However, this is a situation where we are dealing with an unprofessional person. She has called my client numerous times, yells at her, unfairly accused her of "pulling number out of the air" and just set an appointment date for us to be there that was NOT mutually agreed upon, I will be out of town on that date!

I'm just concerned that my client is being harassed by an unprofessional person, that is my concern and I'm thinking her behavior should be kept in check and documented.

Also, she wants the payroll tax info--which is no problem---but I can't figure what that could have to do with a sales tax audit if she has bank statements???????


I still am needing to read the NC GEN statutes and the bill of rights. I will keep everyone posted on our progress FYI. I appreciate all of the help!

[kathyc2]

Thanks for the heads up on use tax, I was clueless about that!

I would normally 100% agree that developing a professional rapport is better than making them mad. I have already been through an audit with NCDOR on 2013 and 2014 with this client, that was all great and conducted very professionally. However, we are still waiting for the letter stating that's cleared.

However, this is a situation where we are dealing with an unprofessional person. She has called my client numerous times, yells at her, unfairly accused her of "pulling number out of the air" and just set an appointment date for us to be there that was NOT mutually agreed upon, I will be out of town on that date!

I'm just concerned that my client is being harassed by an unprofessional person, that is my concern and I'm thinking her behavior should be kept in check and documented.

Also, she wants the payroll tax info--which is no problem---but I can't figure what that could have to do with a sales tax audit if she has bank statements???????


I still am needing to read the NC GEN statutes and the bill of rights. I will keep everyone posted on our progress FYI. I appreciate all of the help!

She's probably tying the deposits from bank statements to gross sales reported to make sure they are in line.

Documenting the contacts would be a good idea. If I'm understanding, you have not had direct contact with auditor, only client has? If definitely sounds like they got off on the wrong foot. I've found that if there is a conflict between people, the person feeling aggrieved will exaggerate their side. It may not be intentional, but when they are relaying the story, how they felt might get intermixed with the facts. Might it help if you were to contact the auditor directly to schedule a time and verify the items requested? That should give you a better indication of if the auditor is acting inappropriately or if there may have been some communication errors between auditor and client.

[TAXNJ]

By now, you should strongly consider representing the client which can be accomplished per the "The Taxpayers' Bill of Rights.... You can authorize another person to represent you if you execute a written power of attorney. Form Gen-58, "....

[Super Mom]

Thanks! I have thought about that maybe me and the auditor can conduct ourselves more professionally. I'm confused though, she did not send a form FA-938-d as the other auditor did stating what she was under audit for and their expectations. She sent a letter confirming the date SHE set (violating the bill of rights) and an IDR. I read the statutes cited and the questions to answer are extensive, but not a problem to fill out. Then in a section called "other" she requests everything you could possibly think of for documents. And she even included a catch all of "any other documents deemed necessary for the examination"

In the NC statute it includes "(5) Other information the law requires a taxpayer to provide or the Secretary needs to perform a duty a law requires the Secretary to perform."

That would seem there is some limit to what the taxpayer must provide????

I guess in a nutshell, I'm wondering if she has the right to officially audit my client again since 2013 and 2014 was cleared? She is asking for EVERYTHING you could think of and we have received no official audit notice, just that IDR and the appointment confirmation.

[Super Mom]

The IDR states Audit period: Sept. 1,2014-June 30,2017
Tax Type: All applicable NC state taxes


The client was informed by phone it was a sales tax audit, then at another time she was told it was a comprehensive audit, then the last time she talked to her she called it a sales tax audit.

Does this appear to be on the up and up to y'all?

Once again, we have gotten no official notice that she is under any type of audit for those dates other than this IDR sent with the appointment confirmation (an appointment set solely by the auditor in violation of my clients rights)

[FEDUKE404]

Auditor behavior

Without getting into the weeds of the merits of your case. . .

Several years ago I got into a conversation with a NCDOR auditor who just went berserk over the phone. In simplest of terms, issue was NC wanted taxes on former NC state employee/retiree who had been living out of state for several years. I think a reasonable person would have inferred she made "threatening" remarks, to include client needed sworn affidavits, they would (how?) attach his income, need to produce all sorts of documents, etc. It was obvious I was getting nowhere. Oh yes: NCDOR had already sent a "bill" for several thousand dollars of unpaid taxes plus interest/penalties to my client.

So. . .I hung up the phone, called back NCDOR, and stated I needed to talk to the supervisor of "Employee X." We had a most pleasant conversation, and upon his request and a later presentation of a copy of the client's VIRGINIA tax return (with the NC retirement income reported in full) for the relevant year, the matter was quickly resolved.

Just another day at the NCDOR. In general, once you get by the phone firewall, I've had good experiences with their personnel. But, every now and then. . .

FE

[Super Mom]

Update:

Power of Attorney is pointless if this is a sales tax audit, client prepares her own sales tax returns, I only do her income tax and payroll tax. We typed a letter referring to her rights and the instances in which they had been violated and that she would not be able to make the appointment set by the auditor. So that it is all documented. My client sent the letter certified and as soon as she got the card back, she called NCDOR and asked for that woman's supervisor because she just really does not want to deal with this woman anymore after all she has done. Her supervisor was to call her back and that has not happened as of yet. I will keep this board posted for those that are interested.

My biggest concern in this whole matter, is the fact that my client HAD to make an appointment before anything in writing could be sent. My client did not set an appointment so this auditor did, then she sent a confirmation and information request for everything you can think of. When a person is under audit, that is not contingent on their cooperation, I just don't understand this at all!