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SALT TALK: Refund Claims – Be Careful What You Wish For

Posted by Wayne K. Berkowitz CPA, J.D., LL.M. on Feb 27, 2017 11:00:00 AM
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Fame, fortune, and now tax refunds? According to some commentators, the Pennsylvania Department of Revenue is proposing to make the sales tax refund process akin to the regrets many throughout history have claimed to experience upon reaching a long sought after goal.

While the draft Sales and Use Tax Bulletin[1] certainly serves as a reminder of the perils associated with chasing goals not carefully thought through, isn’t the Bulletin nothing more than a reminder to taxpayers to carefully consider both the pros and cons, as well as the timing, of filing any type of refund claim, Sales Tax or otherwise.

The Bulletin states that “large and complex sales and use tax refund petitions” may be addressed through the field audit process. While I can’t speak for others, regardless of the type of tax involved, virtually every large and complex refund claim I have filed on behalf of a taxpayer, has involved some type of field audit associated with it. Did you really think the taxing jurisdiction was just going to hand over a check?

I don’t recommend shying away from a refund claim, but all factors must be considered before jumping into the fray. Careful consideration must always be given to the strength of the claim itself as well as to any exposure areas that could potentially offset the claim and even generate additional tax liability. Timing of the claim must also be carefully considered. Even recurring issues for future years must be closely examined. And last but not least, after the costs involved in filing a claim, you must ask: Are we going to come out ahead? Not just in dollars and cents, but in time taken away from other potential money making activities.

With both new and existing clients, we carefully analyze the pros and cons of pursuing a refund claim. While we all love the instant gratification of receiving a check, long term goals must be thoughtfully considered.

If you are considering a refund claim, I can help you weigh the many factors to see if it is a good move. Contact me at 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.

[1] Sales and Use Tax Bulletin 2016-02 DRAFT November 18, 2016


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