State Audit Conducted on Two Businesses Concludes Favorably!
April 15, 2024 | Written by: Kaylie J.
In January of 2022, Oscar and Susan received a notice from their state's Department of Revenue telling the couple to expect an audit on their businesses within the next six months. The notice required the couple to provide documents to support all income, deductions, exemptions, and expenses claimed on their tax returns for the past three years. Oscar and Susan were unsure how to handle this audit and felt overwhelmed by the idea of handling this alone. However, after calming down, Susan checked their tax returns and was reminded that they purchased Audit Defense for all three years! After double-checking their tax returns, Oscar contacted our Customer Service department and explained their tax dilemma. The Customer Service Representative provided Oscar with instructions on the next steps of the process and informed him that their Case Coordinator would be in contact soon.
A few hours later, their Case Coordinator, LaShawna, reached out. She requested the necessary initial documents and let the taxpayers know that they would be contacted by their Tax Professional shortly. That same day, their Tax Professional, Bill, reached out to the couple and asked for the couple's tax returns for the past three years. Once the couple sent their tax returns, Bill scheduled a phone meeting with them to discuss their tax situation. During the conversation, Bill reviewed the couple’s tax returns and asked to see their business income statements, W-2s, and Form 1098.
Since the couple had not received an official audit notice, Bill recommended they put the case on hold until they received an audit date from the Department of Revenue. During this hold, Bill requested supplementary documents from the couple, which he anticipated the Department of Revenue might request. These documents were related to fully validating the couple's claims on their Schedule A deductions.
Seven months later, Oscar received a letter from his state's Department of Revenue. The letter informed him of an official audit date scheduled for the following month and included a list of requested documents. Oscar immediately contacted his Case Coordinator, and his case was re-opened. Unfortunately, Bill was unavailable due to an unexpected life event, so the case was assigned to another Tax Professional, Jessie. Jessie quickly reviewed the case and seamlessly jumped in, requesting the documents that were not previously requested or received. The requested documents included employee business, medical, state and income taxes, real estate, and personal property expenses.
Although the couple could provide some of the requested documents, they could only provide some of what their state Department of Revenue wanted. Jessie scheduled a call with Oscar to discuss the situation. During the call, Jessie explained to Oscar that if he didn't submit all the requested documentation, he would still owe the Department of Revenue money. However, because they were submitting a response, they may owe less than the original audit amount. Oscar confirmed that he wanted to submit an incomplete response since the additional documents could not be found. He thanked Jessie for her work so far.
With this confirmation, Jessie prepared a response, which was reviewed and approved by the Quality Control department and then sent to the Department of Revenue. After submitting the response, Jessie informed Oscar and Susan that it could take two to three months to hear back from the Department of Revenue.
After three months went by, Jessie followed up with the Department of Revenue to check on the response status. The Department of Revenue confirmed they had received the response but had not yet reviewed it. Two months later, Jessie reached out again and was told that the Department of Revenue should have a response for the taxpayer the following month.
Finally, nine months after the response was sent, the Department of Revenue sent a response letter that informed the couple that they only owed $1,000 for two years audited. The third audit year was outside the statute of limitations, so this audit was closed with no changes. This case demonstrates how preparedness, quick, and attentive work from Tax Professionals Bill and Jessie saved our members $14,000. As a result, the couple only had to pay $1,000, which was a much better outcome than initially expected!
This was what Oscar and Susan had to say about this case:
“Jessie did a fantastic job for me! The upgrade was worth the extra money.”
*Some names and identifying details have been changed to protect the privacy of the individuals.
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