An engineering, design and manufacturing company, with several locations across the U.S., was audited by the state tax agency. The audit focused on state employment tax credits captured by the company over several years.
The Problem: An Audit Denying $3 Million In Reported Tax Credits
The company worked with another tax consultant when they claimed substantial state employment credits – $5 million over several years.
During the audit, the tax agency denied over $3 million of the company’s reported tax credits. The company was understandably very frustrated with having to be audited, and was actively looking for expert assistance and guidance.
The company’s tax consultant, who originally assisted them with capturing the state employment credits, ended up assisting the company with the audit. However, the tax consultant was charging new fees for their audit support. The tax consultant’s original work did not include audit support and defense.As a result of this frustration, the company discontinued claiming the state employment tax credit in the current year, because they didn’t want to fuel the problem of having to defend these claims.
The Solution: CTI Resolved The Audit By Redoing The Work
The company reached out to CTI and spoke about their difficulties during a call. They explained their situation (and their frustration), and CTI provided them with the following solution:
First, CTI conducted a free analysis in which they reviewed the company’s tax returns in person, along with the previous work completed by the other tax consultant services provider. They also analyzed the correspondence between the company and the tax agency.
After a round of thorough analysis, CTI offered to handle the audit support, for no charge, with an agreement to become the company’s tax consultant service provider from there on out.
CTI was then able to resolve the audit by redoing much of the original work and taking a different position than that of the previous tax consultant. CTI felt the previous position was unproductive and would not result in a positive conclusion.
The Result: The Company Recovered $3 Million And More
CTI was able to overcome the entire $3 million previous denial from the state tax agency and generate another $1 million in state employment credits. So, ultimately, the company received a $6 million benefit instead of the $5 million they originally reported.
Ready to learn more about the benefits of partnering with an outsourced tax consultant who offers expert guidance and audit support? Schedule your 30-minute review with a tax expert at CTI.
