Hire A Tax Attorney Early In An Audit

This is a cautionary tale of what clients should NOT do...how delay in seeking out a tax attorney will cost them $100,000 in sales tax from their own coffers. A sales tax client came to us in August. The business had been audited the previous year. The client had been using an accountant to make appeals to the Department of Revenue and the appeal level, Board of Finance and Revenue. We did not know the extent of the accountant's handling of the case before the client retained us. Neither the client nor the accountant informed us of the extent of the negotiations that had taken place previous to our retainer. It was only upon making contact with Dept. of Revenue and the Board that I discovered that the avenues available were already foreclosed, because of the less-than-competent handling of the case prior to our retention. In fact, the accountant is not supposed to handle such cases at the appeal level at the Board. It constitutes the unlicensed practice of law. The case could be won if we are able to present evidence in the form of exemption certificates that were not available at the time of the audit, and which the accountant did not collect and submit; however, the accountant did not do this, and the time for doing so expired prior to our retention. Our only hope would be to, once the Board issues an order sustaining the assessment of over $154,000 in sales tax, appeal to the Commonwealth Court. The client does not want to incur the cost of such an appeal. In short, the accountant mishandled the case. There has been an offer on the table, since before our retention, of $100,000, and the client must either accept, or risk the larger assessment, after which the only avenue is the appeal to Commonwealth Court. Moral of the story--people should consult a tax attorney EARLY in the process and not later.

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