Friday, June 03, 2005

Predatory Auditors - a "Harvest" Audit


This sort of thing doesn't happen all the time, and may never happen at all in your state. But this particular practice is worth noting to give you some ideas about avoiding similar trouble.

One seminar participant reported that an auditor had stayed for over 2 years (and was still there when she was at the seminar).  In that time, he had managed to get engaged to one of the AP specialists. The state wouldn't close the audit but stayed on site, not so much to find more dirt on the taxpayer under audit, but to continue to go through their files looking for other companies to audit. It was, in their words, a "harvest" audit.

Frankly, it sounded like the revenuers back at the state office building didn't want this guy to come back and were happy to have parked him someplace else.  And he was happy to stay, for the obvious reasons. 

How do you avoid this?  Don't let auditors get too comfortable. Be professional and put them in a hospitable location. But restrict access to just key audit contacts. Physically isolate them as far from others in the office as possible (particularly AP), and establish some time limits.

Here's one situation where it's OK to let the auditors be comfortable.

And for God's sake, keep them away from your AP staff!  That is, unless you feel like buying a shower present, then a wedding gift and, probably at some point in time, a baby shower gift.  Ugh.

The Sales Tax Guy

See the disclaimer - this is for education only.  Research these issues thoroughly before making decisions.  Remember: there are details that haven't been discussed, and every state is different.  Here's more information

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