What to Expect Cost-wise
As I have mentioned before, sales tax audits are very cumbersome processes. They involve a lot of documents and a lot of data and they take a while to get through.
At our firm, efficiency is one of our key factors in the work that we do. We want to make sure that the work and the value that we are providing for clients are in line with their cost expectations.
With that said, sales tax audits are a lot of work. There is a lot of organization and presentation of the materials. There is a lot of tendency for disagreements in sales tax audits particularly when the auditor is using statistical samples.
Oftentimes, those statistical samples come out wrong on the CDTFA side and we have to correct them. It gets tough when you have an auditor and you get into a conflict with that auditor and the auditor will back down.
With that said, sales tax audits have the ability to drive cost. One of the things that we do to mitigate cost is by trying to minimize cost in three key areas.
The first one is with decisions. We would like to put our clients in the position to make quick and accurate decisions. The easier decisions come, the easier it is to deal with the sales tax audits and the lower the cost to the client.
Number two is documents. We work with the client and our team to streamline the document gathering, organization and presentation process.
A lot of times, we can put the burden on the client and the client has internal resources to handle document organization and delivery much more efficiently than our staff or at least at a lower cost.
If that is not the case, we have a very talented team of junior staff members who have done a lot of sales tax audits and who can work through the process very quickly, assembling exactly what our senior team is going to need to defend the audit.
The third avenue is bureaucracy. Unfortunately, with most agencies, bureaucracy goes hand-in-hand. Occasionally, you are going to have good people in the CDTFA, who are going to move the audit through quickly and without hassle but also occasionally, you are going to have some bad people.
Most CDTFA auditors will fall within the middle but the goal, at least at our end, is to organize the audit to come to terms with the auditor at the beginning and to agree on an audit plan to move the audit forward as efficiently as possible.
With those caveats said, what I tell clients is sales tax audits usually range between $5,000-$15,000.
Obviously, that is a pretty big range but it depends on the client, it depends on the amount of data that we are dealing with and it depends on the difficulty that we are having with the auditor. Rest assured, we are going to try and minimize the cost in the process.
We certainly are cognizant of the fact that a sales tax audit is a marathon and not a sprint and we want to save and allocate resources for when we are actually going to need them.
We also want no illusions coming in about how big the process is and how much risk it is to you if it does not get completed properly.
That is the best estimate that I can give you about the cost of your matter. If you want to know more, the best way for me to give you a cost projection is by understanding the facts about your particular situation.
When I can apply your facts to the situation at hand, I can give you a much better estimate of what the cost would be in your particular matter.