Thursday, November 16, 2006

How far can we go back for a refund?

Another question...two in one day! How exciting!: How far can we go back? We've been overpaying a vendor for many years. Is it reasonable to expect a refund for several years of overpaid taxes?

Generally, you can only go back 3 or 4 years, depending on your state's statute of limitations. And yes, almost every state expects you to get the refund from the vendor. And the vendor has to give you a refund. Expect resistance, however. Unless it's something obvious, like a resale issue, they may not understand the law and fight it.

In addition, if the amount is substantial, they may have to file for a refund with the state after giving you a refund...which means a cash flow problem. And finally, asking for a refund (or credit) will probably trigger an audit, which they don't want.

Good luck. And check with your CPA.

Sales Tax Guy
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3 comments:

Anonymous said...

Thank you for the information. I'll keep you posted. I think we are in for a very large refund. The seminar paid for itself!

Anonymous said...

Jim,
This vendor gave us a partial refund, but I am still trying to collect the remainder, almost a year later.

Do I have any other recourse?

Jim said...

Why have they given you a partial refund? Do they not agree with the remainder?

Your options, assuming that you are owed the money, is to sue or, depending on the state, contact the state and ask for the refund.

Letting the vendor know that you plan to go to the state might loosen them up.

You should be talking to a local sales and use tax professional about this.

Jim