Berdon Blogs

SALT TALK: Texas Issues New Specialty License Plate for Complying with State Tax Law

Written by Wayne Berkowitz CPA, J.D., LL.M. | Jul 10, 2017 1:19:00 PM

Well, not really. But if you go to the Texas DMV website you will see they have over 452 different types of specialty license plates to choose from. (55 are discontinued)  So upon receiving a “no change” letter for a recently completed Texas audit, which in addition to informing me that my client had no additional tax liability, I was awestruck by the following additional language:

Let me commend you for your diligent and successful efforts to comply with the applicable Texas law. The manner in which you have handled your obligations helps make each tax dollar go further in paying for the essential services provided by state government. I also want to thank you for the cooperation and courtesy extended to my auditor during the audit.

First, I thought a commemorative plaque for my desk would be appropriate, but then I thought why not a special license plate for those who have diligently and successfully complied with the law.  When you have 452 plates, what’s 1 more?

While I really do appreciate the courteous letter, these auditors came on charging like the official state mammal, the Texas Longhorn. I quickly forgot the official state motto is friendship. Well, not really. Most clients (a.k.a. successful business persons) aren’t accustomed to dealing with auditors. Auditors also aren’t always dealing with cooperative and compliant taxpayers. So they often come on strong. This is why it is important from day one of the audit to have an experienced tax professional act as your advocate. 

Auditors often request every document or electronic record they can possibly think of. Explaining the business in detail and reminding auditors of past examinations often cuts these requests to a fraction of the original ask. Factual issues can be immediately addressed and hopefully agreed to, so that they can be distinguished from legitimate disagreements over the law. Once these disagreements are identified, it is important to determine if one side is just honestly mistaken or if either side is pushing the envelope as to the current application of the law. 

Following this logical approach with any type of tax audit is going to save time and money. It may even earn you a specialty license plate. If you have questions about what to expect when the auditor comes calling and how you should prepare, I can be reached at WBerkowitz@BerdonLLP.com or your Berdon advisor.

Wayne Berkowitz, a tax partner and head of the State and Local Tax Group at Berdon LLP, advises on the unique requirements of governments and municipalities across the nation.