What If Your Auditor is a Bully?
A lot of times auditors can be very tough with taxpayers and can have bullish behavior, either because they think the taxpayers don't know what is required or because the auditors themselves don't know what’s really needed. So how do you handle such cases?
Michael Fleming, host of the Sales Tax and More podcast, has the solution.
Michael is the founder of Sales Tax and More and is one of the country's leading authorities for state tax issues like consulting and research, registrations, returns, nexus, drop-shipping, eCommerce, and service providers. He is a writer and speaker, and he regularly presents on webinars.
In this episode, Dr. Jeremy Weisz is the one leading the interview with Michael Fleming as they talk about working with a bully auditor and how to resolve the issue.
Here’s a glimpse of what you’ll learn:
Tax auditing by a “bully” auditor
Michael shares a client experience with a “bully” auditor
How Michael helped resolve the case
The advantages of bringing in an expert to work with a bully auditor
Resources Mentioned in This Episode
Connect with Michael
Sponsor for This Episode
Sales Tax and More assists companies and their trusted advisors like CPAs with sales tax needs. They offer consulting and research, registrations, returns, and so much more. Over the years they have assisted thousands of sellers both foreign and domestic with their tax issues in the United States and in Canada.
Episode Transcript - Audio Version
[0:10] Intro: Welcome to Sales Tax and More, your go-to resource for all things state tax-related. Now, here's your host, Michael Fleming.
[0:17] Mike: Mike Fleming here. I am the founder of Sales Tax and More, and today's host of the Sales Tax and More Podcast where we talk about everyone's favorite subject, which is, of course, sales tax, and I've got Jeremy Weiss here who has done, you know, thousands of interviews with successful entrepreneurs and CEOs. But today, we're flipping the script and he's going to be interviewing me.
[0:53] Jeremy: Michael, thanks for having me, and just a brief thing about Michael Fleming and I consider, many people consider one of the USA is leading authorities when it comes to sales tax. And the episode is brought to you by Sales Tax and More they assist companies and their trusted advisors with their sales tax needs. They offer consulting and research registrations, returns, and much more. And over the years, they've helped thousands and thousands of sellers, both foreign and domestic with their tax issues in the United States and Canada, you can go to SalesTaxandMore.com for more information and check out more episodes of the podcast as well. You know this is an interesting topic, Michael. What I wrote in my notes is, what if you're being bullied? What if you're being bullied? Talk about what happened.
[1:39] Mike: Yeah, and you know, sometimes maybe it's not bullying, but a lot of times, you know, auditors are very firm with the taxpayers. And, you know, either because they think that the taxpayer doesn't know or sometimes the auditor themselves don't know. In this situation, a lot of states right now are going backward in auditing people who they believe crossed nexus months ago or a year ago. States like Maine, whose economic nexus began July 1, 2018. And they sent out a letter to everyone and said, “Hey, you're going to prove that you didn't have nexus as of this date.” Well, one of our clients got that letter. And they were working with the auditor, and they provided all the information. And the auditor came back and in the, I don't think he was being a bad guy. I just think he was probably a newer guy or, or whatever else. Let's give him the benefit of the doubt. But he was saying that even though nexus began on November 29th, that they needed to collect tax for the entire month and the client couldn't get them to budge. Either way. So they turned it over to us, and I got on the phone with one of our people internally, he was working with the client. And he said, “Yeah, I can't get them to answer my phone.” I said, “Okay, we'll leave him a voicemail.” So we gave him a call and just left a simple message saying, “Hey, this is Mike Fleming with Sales Tax and More representing so and so, here's what we're seeing. And you know, are you seeing something different? You know, because if we use November 29, how in the world can you be asking for tax back there? Because you can't collect be required to collect tax before you have nexus.” So real simple message like that. But the fact that it was coming from us rather than coming from the client had a great impact because never spoke to the auditor, get a call the next morning, and it was taken care of, and it was you know, $3,000 - $4,000 error. So, quick telephone call from us and at a good rate of return. The client loved us. So they're not going to all be that quick or that easy. But a lot of times just having someone other than you. If it's you and the auditor, sometimes it can be adversarial, where we may even know the auditor from having worked with him before. So we're bringing credibility in there. We also take a lot of the emotion out of it. So we're coming at it, they expect us to know what we're doing. We're not a pushover, we're going to stand up for where we're right. We're not going to make emotional arguments and say, “Well, because you know, that's not fair.” We're going to say, “Hey, here is what we see. Can you share what you're seeing?” And in this case, you see how that can make a major impact.
[4:51] Jeremy: Yeah, so someone being, you know, a couple of factors: third party and an expert coming in, and they realized their talking to a peer instead of someone who doesn't know what they're talking about.
[5:05] Mike: Right, And they also know that we're smart enough if we don't get the answer that we like there, and we're sure about it, we'll go up a level. And he went up a level himself to speak to his supervisor, who then came back and did it. So you know, it's a lot better. You know, the state employees, a lot of them are brand new. And they all have someone they report to, and he's got to go back and get permission to do it.
[5:33] Jeremy: That's a good point. Because they don't want to lose their job or look bad to their superior.
[5:38] Mike: Exactly.
[5:39] Jeremy: Nice. Michael, thank you. So don't get bullied. All right. Go to salestaxandmore.com for more information and thank you for letting me join you.
[5:50] Mike: Thanks, Jeremy. Great to have you.
[5:53] Outro: Thanks for listening. Be sure to click subscribe and check out all of the resources we have out on the web.