Alternative Compliance Procedures
Ryan's professionals assist our clients with the evaluation,
development, negotiation, and implementation of alternative compliance procedures,
such as managed audits, managed compliance, contract auditors, and alternative
reporting procedures.
Alternative compliance procedures became prominent in the 1990s as taxing
jurisdictions and taxpayers searched for ways to increase efficiency and
reduce compliance costs. Alternative compliance procedures began with a
few very large taxpayers "unofficially" testing
ways to streamline the process. Now, many jurisdictions have formalized
the procedures by adopting legislation, regulations, and programs.
Services Provided:
We provide a comprehensive
portfolio of services.
- Alternative reporting procedures include a wide variety
of techniques to remit tax based on estimation procedures.
This includes calculating tax using managed compliance
without a written agreement with a taxing jurisdiction and
estimating post-audit period liabilities using prior audit
results with the focus to increase efficiency and reduce
compliance costs.
- Many taxing jurisdictions hire contract auditors to
perform audits on their behalf. This type of auditing
is more common with property tax and unclaimed property
but is slowly expanding into the sales and use tax area.
With limited budgets and resources, contract auditors
have become a popular way for taxing jurisdictions to
increase tax revenues resulting from audits without
increasing headcount. As with anything, there are pros and
cons to this approach. Special caution should be taken
to make sure a confidentiality agreement is in place with
the contract auditor. Additionally, taxpayers should be
wary of contract auditors working on a contingency fee
("bounty hunters").
- A managed audit allows a taxpayer to perform most of the
traditional auditor functions such as determining the scope
and workplan of the audit, performing the data reconciliation,
and creating the audit assessment/credit schedules (subject
to the taxing jurisdictions approval) in exchange for a waiver
of penalty and/or interest. A written agreement between the
taxpayer and the taxing jurisdiction is required.
- Managed compliance is when a taxpayer enters into a
written agreement with a taxing jurisdiction to report
sales and use tax of purchase transactions based on a
predetermined percentage, usually by a specific account
or group of accounts, for a period of time in order to
reduce the administrative burden of reviewing every
transaction in detail for taxability. This type of
agreement usually only applies to direct payment permit
holders and is limited to expense purchases.
Expertise:
Our team of experienced professionals can help our clients evaluate
alternative compliance procedures to determine which, if any,
would benefit your company. Alternative compliance procedures
are not for every company and should be approached with caution.
We can help our clients explore the options to ascertain whether the
benefits outweigh the costs.
Our approach includes evaluating the options, developing the techniques to
apply the procedures, negotiating the agreements, and implementing
the procedures. We handle alternative compliance procedures from
start to finish.
For more information regarding Ryan's alternative compliance
procedures services, please contact us
at 972.934.0022.
Tax Developments
California Extends and Expands Managed Audit Program.
Texas Comptroller Revises Managed Audit Program to Limit Refund Opportunities.
Texas Adopts a Managed Audit Program, by Tiffany Westmoreland.
Texas Sales & Use Tax Managed Compliance-Advantages and Disadvantages.