đChandigarh Call Girls đ9878799926đJust CallđChandigarh Call Girl In Chandiga...
Â
Arizona and City Audit and Appeal Procedure - July 2009
1. Advanced Sales and Use Tax in
Arizona:
Arizona and City Audit and Appeal Procedure
Presented by
Mike Galloway
Shareholder
Bancroft Susa & Galloway, PC
www.arizonatax.com
Bancroft Susa & Galloway
A PROFESSIONAL CORPORATION
2. Overview
⢠Arizona Department of Revenue Tax Audits
⢠Arizona City Tax Audits
⢠Appeals of State Audits
⢠Appeals of City Audits
⢠Claims for Refund
⢠State Taxpayer Bill of Rights
⢠City Taxpayer Bill of Rights
3. Arizona Department of Revenue
Sales and Use Tax Audits
⢠The Department can audit for almost
any reason.
⢠The Department can review almost any
books and records.
4. Arizona Department of Revenue
Sales and Use Tax Audits
⢠Audits must be finalized within the
applicable statutes of limitation.
⢠Auditors can do a detailed review or use
sampling.
â More on sampling later.
5. Types of Audits
⢠There are essentially two types of audits:
⢠Desk audits.
â Usually by mail.
⢠Field audits.
â There is various paperwork.
â The auditor visits the taxpayerâs business
office.
â The audit may last a long time.
â The auditor will (usually) issue a deficiency
assessment.
6. Other Examination Methods
⢠The Department can order a person to testify before it.
⢠It can issue a subpoena duces tecum.
⢠It can apply to the Tax Court to shut down a business.
â It can have the Sheriff seal the office.
â It can deny the taxpayer access.
⢠It can go straight to the Tax Court to collect unpaid
back tax.
7. Other Examination Methods
⢠Other methods if tax returns are not filed:
â Review taxpayer and nontaxpayer records
(after a demand).
â Demand a return or estimate income, and
go immediately to the Tax Court to enforce
an assessment (false or fraudulent return).
â Obtain a writ of mandamus to get a return
filed (judgment).
â Obtain a Tax Court order to compel the
production of books and records (after
willful failure to produce).
⢠Failure to do so is punishable as
contempt of court (jail).
8. Jeopardy Assessments
⢠If the Department believes that collection of tax is
threatened by delay, it can issue an assessment
demanding immediate payment.
⢠It can initiate immediate collection proceedings.
â The taxpayer can stop this by filing a bond within
ten days after getting notice of the assessment.
â The taxpayer can appeal after this.
â The taxpayer can appeal without filing a bond but
the collection action is not stayed.
⢠The taxpayer can obtain expedited review within the
Department.
⢠The Taxpayer can get quick review in the Arizona Tax
Court.
9. Appeals of Department Sales and Use Tax
Audits
⢠Department notices of deficiency can be
appealed.
⢠The deadline is usually 45 days from when the
notice is issued.
â Individual income tax is 90 days.
10. The Department Protest Petition
⢠The protest or appeal petition must
contain various information.
⢠Unprotested tax must be paid.
⢠Unauthorized practice of law.
⢠Powers of attorney.
11. The Informal Conference
⢠Nothing requires an informal
conference.
⢠It is an opportunity to informally resolve
remaining differences with the
12. Formal Hearings
⢠If there still are disputes between the
taxpayer and Department, the appeal
goes to a formal hearing.
⢠It is held before the Office of
Administrative Hearings.
⢠An in house attorney will represent the
Department.
⢠Post hearing briefing can be submitted
to the judge.
⢠The judge will issue a written decision.
13. Appeals to the Director
⢠Either party may appeal the OAH
decision to the Director of the
Department.
⢠If the Department loses, it must appeal
to the Director.
⢠If the taxpayer loses, appeals to the
Director are optional.
⢠At this point, taxpayers may also appeal
to the Arizona Board of Tax Appeals or
the Arizona Tax Court.
14. Appeals to the Director
⢠The Director usually reviews the existing
record.
⢠The Director issues a written decision.
⢠If the Department loses, it cannot appeal
any further.
â The Directorâs decision becomes the
official position of the Department.
⢠If the taxpayer loses, it may appeal to
the Arizona Board of Tax Appeals or
the Arizona Tax Court.
15. Appeals to the BOTA
⢠Taxpayers can appeal to the BOTA after
it receives the Departmentâs final order.
⢠OAH and Director decisions are final
orders.
16. The BOTA Appeal Process
⢠The BOTA protest petition requires
certain information.
⢠Briefing is required and is submitted pre-
hearing.
⢠The BOTA usually requires the parties
to submit a pre-hearing stipulation of
facts and statement of disputed facts.
⢠A hearing is held before the three BOTA
members.
⢠The BOTA issues a written decision.
17. Recovery of Fees and Costs
⢠A special rule allows taxpayers to recover
some of their fees and costs if:
â The Departmentâs position was not
substantially justified, and
â The taxpayer prevails on the most
significant issues.
⢠Apply to the Departmentâs TPRO.
⢠The denial of fee or cost recovery can be
appealed.
⢠$20,000 cap per level.
⢠Not just attorneysâ fees.
18. Appeals to the Arizona Tax Court
⢠Decisions from the OAH, Director and
BOTA can be appealed to the Arizona
Tax Court.
19. The Tax Court Appeal Process
⢠The Tax Court is a division of the Maricopa
County Superior Court.
⢠It hears all tax cases statewide except for
some property tax appeals.
⢠Tax Court appeals are de novo.
⢠There is no âpay to playâ.
⢠The Department has the burden of proof on
factual issues.
⢠The Tax Court can publish full opinions.
⢠It will issue some type of written decision.
⢠There is a small claims division
20. Appeals to the Arizona Court of Appeals
and Supreme Court
⢠Tax Court final judgments are appealed like
most other superior court decisions to the
Court of Appeals.
⢠Court of Appeals decisions can be appealed
to the Arizona Supreme Court, which has
discretionary review.
21. Recovery of Attorneysâ Fees and Costs
⢠A special statutory provision allows
taxpayers to recover some of their
attorneys fees and costs if they
ultimately prevail.
⢠Fees are capped at $30,000 but that
applies to each level of appeal.
⢠Witness fees and similar expenses are
also recoverable.
22. Appeals to the U. S. Supreme Court
⢠Review is discretionary.
⢠The Court rarely takes tax cases.
23. Arizona City Sales and Use Tax Audits
⢠Big Arizona cities conduct their own
audits.
⢠Usually, the Department audits for small
Arizona cities (the âProgramâ cities).
â Usually when doing its own audits.
24. Arizona City Sales and Use Tax Audits
⢠Sometimes small cities supplement the
Department audits.
â They hire contract tax auditors.
⢠The audit procedures are essentially the
same as with the Department.
⢠The cities and Department share
information.
⢠City audits must conform with GAAS.
â This can affect sampling.
26. Appeals of City Tax Audits
⢠Small city audits conducted by the
Department are appealed to the Department.
⢠Small city audits conducted by a city are
appealed to the MTHO.
⢠The Model City Tax Code has specific appeal
procedures for all types of appeals.
⢠The MTHO or the OAH will conduct the
hearing.
⢠It will issue a written decision.
⢠It can be appealed to the Arizona Tax Court.
⢠The appeal from the MTHO is based on the
final adjustment letter.
27. Claims For Refund
⢠Refund claims can be filed with the
Department and any city.
⢠As with tax assessments, they must be filed
within the appropriate statute of limitations.
28. State Refund Claims
⢠If the Department doesnât respond to a
refund claim within six months, consider
it denied.
⢠If an appeal deadline for a tax
assessment is missed, the tax can be
paid and a refund claim filed.
⢠Refunds do not have to returned to the
actual customers that paid the tax.
⢠A refund claim may trigger an audit.
â The taxpayer may want an audit.
29. State Refund Claim Appeals
⢠Refund claim denials are appealed in
the same manner as tax assessments.
30. City Refund Claims
⢠Essentially the same as Department refunds.
⢠No six month rule.
â A ârefusalâ to process or ârequest to refileâ a
refund claim can be appealed.
â You may not know when these occur.
⢠Refunds do not have to be returned to the
actual customers that paid the tax.
⢠A refund claim may trigger an audit.
â The taxpayer may want an audit.
â It must be reasonable.
31. City Refund Claim Appeals
⢠Refund claim denials are appealed in
the same manner as tax assessments.
32. State Taxpayer Bill of Rights
⢠The TBOR was first enacted in 1994
and has been expanded many times.
⢠Many of the provisions affect audits and
appeals, and other disputes.
33. State Taxpayer Bill of Rights
⢠1. Arizona Taxpayer Assistance Office â
A.R.S. § 42-2051.
⢠2. Erroneous or Misleading Advice and
Statements â A.R.S. § 42-2052.
⢠3. Taxpayer Interviews â A.R.S. § 42-2053.
⢠4. Disclosure of Taxpayer Information â
A.R.S. § 42-2054.
⢠5. Taxpayer Assistance Orders â A.R.S. §
42-2055.
⢠6. Closing Agreements With Extensive
Taxpayer Misunderstanding â A.R.S. §
42-2056.
34. State Taxpayer Bill of Rights
⢠7. Agreement for Installment Payments of
Tax â A.R.S. § 42-2057.
⢠8. Basis for Evaluating Department
Employee Performance â A.R.S. § 42-2058.
⢠9. No Additional Audits or Proposed
Assessments â A.R.S. § 42-2059.
⢠10. Refund If Items of Income Transfer from
One Year to Another â- A.R.S. § 42-2060.
⢠11. Expedited Review of Jeopardy
Assessments â A.R.S. § 42-2061.
⢠12. Abatement of Penalties â A.R.S. §
42-2062.
35. State Taxpayer Bill of Rights
⢠13. Department Responsibilities and
Deadlines â A.R.S. § 42-2063.
⢠14. Reimbursement of Fees and Costs â
A.R.S. § 42-2064.
⢠15. Abatement of Interest for Errors or Delays
Caused by the Department â A.R.S. §
42-2065.
⢠16. Statute of Limitations on Tax Debts â
A.R.S. § 42-2066.
⢠17. Limitation on the Use of Pseudonyms by
Department Employees â A.R.S. § 42-2067.
⢠18. Suspension of Statute of Limitations
During Taxpayer Disability â A.R.S. §
42-2068.
36. State Taxpayer Bill of Rights
⢠19. Privileged Communications With Tax
Practitioners â A.R.S. § 42-2069.
⢠20. Prohibited Audit Techniques â A.R.S. §
42-2070.
37. State Taxpayer Bill
of Rights
⢠21. Reimbursement of
Bank Costs by
Erroneous Tax Levies
â A.R.S. § 42-2071.
⢠22. Stay of
Enforcement Actions
Pending Offer in
Compromise â A.R.S.
§ 42-2072.
38. State Taxpayer Bill of Rights
⢠23. Report of Employee Misconduct â A.R.S.
§ 42-2073.
⢠24. Equitable Relief From Joint and Several
Liability â A.R.S. § 42-2074.
⢠25. Duration of Audits â A.R.S. § 42-2075.
⢠26. Explanation of Audit or Refund Denial
Results â A.R.S. § 42-2076.
⢠27. Distribution of Unpublished Tax Cases â
A.R.S. § 42-2077.
⢠28. New Interpretation or Application of Law â
A.R.S. § 42-2078.
40. City Taxpayer Bill of Rights
⢠The provisions are mostly the
same.
â Cities must issue private taxpayer
rulings.
â Allied Waste v. Chandler (TX
2003-000453)
⢠Telling a taxpayer that it was
taxable after years of not
informing it that it was taxable
41. Advanced Sales and Use Tax in
Arizona:
Arizona and City Audit and Appeal Procedure
Presented by
Mike Galloway
Shareholder
Bancroft Susa & Galloway, PC
www.arizonatax.com
Bancroft Susa & Galloway
A PROFESSIONAL CORPORATION