January 15, 2003
FOR IMMEDIATE RELEASE
Texas Comptroller Revises Managed Audit Program to Limit Refund Opportunities.
On Wednesday, January 15, 2003, the Texas Comptroller of Public Accounts
("Comptroller") announced that the managed audit program for Texas sales
and use tax audits has been revised to limit refund opportunities that taxpayer
participants are otherwise entitled to under Texas law.
The managed audit program, enacted by the Texas
Legislature in 1999 (See Texas Tax Code "TTC" §151.0231), allows the
Comptroller to authorize Texas taxpayers to conduct a managed audit or self
audit within certain parameters and guidelines. In exchange for the taxpayer's
performance of the managed audit, the Comptroller may waive penalty and
interest on any deficiency determined to be due.
The Agency reports that it has completed approximately 50 managed audits
with another 120 underway. Although the program has apparently been very
successful, Comptroller's representative, Mr. Tony Luna, Audit Division
Assistant Manager, announced that future Managed Audit agreements would
contain a new Section 8, which provides:
8. Except as provided by the Texas Tax Code, Section 111.104(f),
Taxpayer is entitled to a refund of any tax overpayment disclosed by completion
of the managed audit. Taxpayer's failure to identify and claim a
refund of an overpayment of tax for any period within this Agreement before
the managed audit or the deficiency determination resulting from the managed
audit becomes final is a waiver of any demand against the Comptroller
for an alleged overpayment of tax, except as follows: Taxpayer
may file a refund claim for tax, subject to the applicable limitations
period, if a court invalidates a statutory provision, rule, or agency
policy or if the Comptroller invalidates or modifies a rule or agency
policy. (Emphasis added).
Mr. Luna indicated that the change was being made in a effort to make the
managed audit program more efficient. However, the new managed audit agreement
forces taxpayers to surrender statutory rights to refund in order to participate
in the managed audit program. Essentially, any tax refunds not identified
during the performance of a managed audit are forfeited, unless such refunds
resulted from a tax policy or law change. Furthermore, managed audits typically
have a limited scope that does not include all potential refunds to which
the taxpayer may be entitled. According to Comptroller representative Luna,
refunds outside the managed audit scope would be lost as well if not presented
during the course of the managed audit.
Taxpayers should carefully consider whether to enter into the managed audit
program under this new requirement. Failure to identify tax refunds within
the relatively short time period of a managed audit will result in the loss
of those refunds.
If you have any questions regarding the matters discussed above, or require
any assistance concerning Texas tax matters, please contact Mr. G. Brint
Ryan, Managing Principal, at 972.934.0022. You can also reach Mr. Ryan
by
e-mail.
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