The Texas Comptroller of Public Accounts has recently revised its publication on contesting disagreed audits, examinations, and refund denials related to sales and use tax. The updated guidelines offer taxpayers a clearer understanding of their rights and the procedures to follow when they disagree with the Comptroller’s audit findings or tax assessments. If you’re a Texas taxpayer facing such issues, understanding your options can help ensure that you’re not at a disadvantage when contesting these decisions.
Let’s Break Down The Key Elements of This Revised Publication
1. Pre-Audit or Pre-Examination Disagreements
Before an official audit or examination notification is received, taxpayers have several options to address potential issues:
- Reconciliation Conference: This is an informal meeting between the taxpayer and the Comptroller’s office where both parties can attempt to resolve issues without proceeding to a formal audit.
- Requesting Taxability Guidance: If the taxpayer is unsure about the taxability of certain transactions, they can request guidance from the Comptroller’s office. This guidance can help avoid future disagreements and streamline the process.
- Independent Audit Review Conference: Taxpayers may request an independent review of their records by an experienced tax examiner who can provide a second opinion, potentially resolving discrepancies before the formal audit begins.
2. After Receiving Audit or Examination Results
Once a notification of audit or examination results is issued, taxpayers have a more structured set of options available to contest findings:
- Request for a Conference: If a taxpayer disagrees with the audit findings, they can request a conference to discuss the results in more detail. This provides an opportunity to present additional evidence or clarify any misunderstandings.
- Statement of Grounds for Administrative Hearing Requests: If a resolution is not achieved through a conference, taxpayers can formally request an administrative hearing. This involves submitting a statement outlining the specific grounds for contesting the audit results.
- Notice of Intent to Bypass the Hearing: In some cases, taxpayers may choose to bypass the formal hearing process if they believe a resolution can be reached through other means, such as direct negotiation with the Comptroller’s office.
3. Penalties, Interest, and Waivers
Understanding the financial implications of contested audits is crucial:
- Penalty and Interest: If the audit results in additional taxes owed, the taxpayer may also be required to pay penalties and interest. The revised publication discusses how penalties are assessed, the rates of interest, and how taxpayers can calculate the amount owed.
- Credit Interest: If the audit results in a refund, taxpayers may be eligible to receive credit interest, which compensates for the time between the overpayment and the refund.
- Waivers: There are specific conditions under which penalties may be waived. Taxpayers can request these waivers if they meet the necessary criteria, such as a reasonable cause for non-compliance.
4. The Comptroller’s Authority to Collect Past-Due Taxes
The Texas Comptroller has significant authority to collect past-due taxes, and taxpayers should understand the various mechanisms the Comptroller can use, including:
- Liens and Levies: If taxes remain unpaid after the audit, the Comptroller may place liens on assets or even levy bank accounts to collect the outstanding balance.
- Enforcement Actions: If a taxpayer does not address past-due taxes or contest audit findings, the Comptroller may take further legal actions to ensure payment.
5. Taxpayer Bill of Rights
The revised publication reaffirms the Taxpayer Bill of Rights, which protects taxpayers throughout the process. This includes ensuring that taxpayers are treated fairly, have access to information, and have the right to contest decisions. Understanding this document is key to ensuring that taxpayers are fully aware of their legal protections.
Thompson Tax Is Here to Help
Whether you’re facing an audit or need to challenge a refund denial, there are options available to you, ranging from informal conferences to formal administrative hearings, that help ensure your side of the story is heard. Make sure to review the Taxpayer Bill of Rights and understand the potential financial implications, such as penalties and interest, so you can better navigate any disagreements with the Comptroller’s office. By knowing your rights and the available procedures, you can protect your interests and ensure compliance with Texas tax law.
For further information, reach out to Thompson Tax today. We are your Trusted Tax Advisors.