Florida Company’s South Dakota Contractors’ Excise Tax Audit Reduced by over $97,000
Dakota Business Tax LLC was able to save a Florida contractor that engaged us to review their South Dakota contractors’ excise tax audit over $97,000 in South Dakota tax, interest, and penalty.
The Auditor is Listing Things They Think Might be Taxable
The auditor is listing everything they see that may possibly be taxable to South Dakota. It is then the responsibility of the taxpayer, or for them to engage someone who can look into it, question, and research what is listed in the audit findings to verify if there are items listed that should be removed.
Auditors are not taking the time to ask, “What exactly is this product or service” or “How is this product or service used”. How a product or service is used by the business can change what appears to be a taxable item to a non-taxable item. Auditors are out there trying to complete more audits than the next auditor. To do this, an auditor cannot spend the time asking questions about exactly what the items they are listing are or how they are used. If the auditor asks questions, it just drags out their audit. In addition, increase the hours they have in the audit.
Auditors Can Cut and Past Large Amounts Data into the Audit Findings
Most audits now are being conducted by providing the auditor with electronic records. This makes it very easy for an auditor to cut large amounts of non-taxed purchases or sales data from those reports and paste it into the audit findings because tax might be due. Combining this with it being the responsibility of the taxpayer to identify and provide the proof for items listed in the audit findings that are not taxable. This shows the challenges and the burden placed on bookkeepers and accountants, and the employee resources needed to thoroughly review, understand, and work through the audit findings to identify those non-taxable items.
It is also why every South Dakota state tax audit needs someone with the experience, expertise, and insight into a South Dakota state sales, use, or contractors’ excise tax audit to review the audit findings. Most businesses do not have the resources to fully work through the audit findings. Unfortunately, most businesses will just pay the audit assessment because there is the belief that if the state auditor says they owe it, they owe it. The business owners, controllers, accountants, etc. need to fully understand that the audit findings that the auditor is presenting them is just a listing of purchases or sales that the auditor thinks might be taxable.
Dakota Business Tax LLC Can Help with Your Contractors’ Excise Tax Audit
This is where Dakota Business Tax LLC can help. As a former South Dakota Sales, Use, And Contractors’ Excise Tax Auditor with over twenty-four years of experience, I know what is taxable in South Dakota, and more importantly, what is not. I know the questions to ask about a product or service to determine the taxability of items, and the documentation needing to be presented to the auditor so those non-taxable items that should not be in the audit finding are promptly removed.
South Dakota contractors’ excise tax laws are a complex array of tax laws and administrative rules. Contractors’ excise tax is a unique tax and is frequently under-reported as it does not follow the same rules as sales taxable transactions. The contractor’s receipts may or may not be subject to the excise tax depending upon which tax chapter the project falls taxed under. A contractor working on one pipeline in South Dakota can be subject to the South Dakota contractors’ excise tax but work on another pipeline is not.
South Dakota auditors heavily audit out-of-state contractors working in South Dakota because of the confusion in understanding these laws unique to South Dakota. In addition, auditors know these audits result in some of the state’s largest audit assessments.
Reducing Audit Assessments on Average by 64% and $117,439
Dakota Business Tax LLC currently has an average reduction in audit assessments of 64% and $117,439 from those businesses that have engaged us to be involved in their South Dakota Sales, Use, or Contractors’ Excise Tax audits. Of course, past results are not a guarantee of future results. However, as a former South Dakota state tax auditor, I can provide an unparalleled expertise and insight into a state tax audit. This helps ensure any taxes paid are truly due, taxed under the correct tax laws, or what items we can get removed from the audit.
Important to Identify any Potential Overpayments of Tax
It is also very important during a state tax audit to review and identify any potential overpayments of tax. State tax auditors dedicate their time and effort to identifying tax underpayment, and very little time, if at all, to identifying overpayments. Audited periods cannot be reopened or amended to correct any tax overpayments once the audit is finalized and closed.
We Provide South Dakota Contractors’ Excise Tax Audit Assistance and Defense
Let us at Dakota Business Tax LLC review the audit work papers for you before you agree to close the audit. We will help to make sure you are not being assessed taxes you do not owe, or if you are entitled to any tax refunds. We also know the ins & outs of handling your South Dakota tax audit. Let us do what we do best, providing that audit assistance and defense service so you and your team can concentrate on running your business. We do have contingency fee options, so you only pay our fee if we reduce your audit assessment.
Contact us today at contact@dbtllc.com or call us at (605) 389-7345 to see how our South Dakota Audit Assistance and Defense services can help you, your business, or your clients, and to answer any questions that you may have.
