SALT TALK: State Tax Auditors – They’re People Too

Posted by Wayne K. Berkowitz CPA, J.D., LL.M. on Jun 8, 2020 11:40:00 AM
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We can all agree that this pandemic has gone on quite long enough and, for some, it has been particularly difficult and quite a strain. People are trying to do their jobs often under difficult circumstances. For example:

My office phone rings. Glancing over at the caller id, I can see it is one of the many state tax departments calling me. As I’m not trying to avoid any auditors at the moment, I decide to answer the call.

Mr. Berkowitz, I’m Mr. X from the State of Y Department of Revenue. I see you are going to be representing ABC LLC in their upcoming audit. There is a problem with the Power of Attorney authorizing you to represent ABC. The period you indicated on the Power doesn’t coincide with the audit period.

What did I put on the Power, I ask? The response; January 1, 2018 through May 31, 2019. So I don’t see the problem? Well Mr. Berkowitz, the audit period goes through May 2021. Really, you do know that 2021 hasn’t happened yet? Mr. Berkowitz, I don’t understand, why aren’t you being cooperative? Mr. X, is this a new State policy to extend audits two years out into the future? Mr. Berkowitz, is that really necessary and by the way when can we set up our first appointment? Mr. X, please listen to what you are saying, 2021 really hasn’t happened yet. I am not trying to give you a hard time!

This back and forth went on about three or four times until the auditor had finally realized what he was saying. He was apologetic and slightly embarrassed. You see, auditors are people too. They make mistakes just like the rest of us. They can also be calculating, kind, cruel, hardworking, lazy, intelligent or average. Just like the mix of people you are likely to run into anywhere at any time – and particularly as we deal with today’s unprecedented conditions.

As a tax practitioner, while handling any type of audit, the human element can’t be ignored. While it may not (or may) change the outcome, it will certainly be a major component in completing an audit quickly and efficiently so as to make the process as painless as possible for the client.  Understanding the auditor and their job is going to result in more meaningful requests for explanations and documentation and accordingly result in less time wasted for both sides. Knowing whether an auditor is simply being unreasonable or just doesn’t understand your client’s business is no different than knowing whether one of your employees needs an issue explained just one more time or whether a trip to a higher authority is in order.

If I have raised questions, contact me at or your Berdon advisor.

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




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