State Corporate Income Tax Audits: Preparing the Case

Anticipating Critical Planning and Documentation Demands for State Examinations

Recording of a 110-minute CPE webinar with Q&A


Conducted on Thursday, February 16, 2012

Recorded event now available

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Program Materials

This teleconference will provide corporate tax managers with new tactics for managing the income tax audit process from the receipt of an audit notice to the conclusion of the exam.

Description

The level of scrutiny that businesses now face from state revenue agencies during corporate income tax audits has never been higher. And, the potential stakes for corporate taxpayers with assessments, interest and penalties have never been greater, particularly as states push expansive economic nexus policies.

What business activities are multiple states' auditors investigating as potential nexus triggers? What kinds of tests are they imposing to addback deductions related to transactions involving intangible assets such as trademarks? What level of documentation can effectively bolster your case?

Even if states can't afford to hire more auditors, they have upped the ante in audit aggressiveness. Corporate tax staffs must respond by fine-tuning their comprehensive planning for and management of state corporate income tax audits with approaches that work across multiple states.

Listen as our panel of experienced state tax advisors offers you a multi-state perspective, practical experiences and suggestions, and proven tactics for seizing maximum control of the corporate income tax audit process—along with mistakes to avoid.

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Outline

  1. Preparation for the audit
    1. States’ procedures for assigning auditors
    2. Scope of auditors’ pre-audit research
    3. The pre-audit meeting
    4. Initial contact with the auditor
    5. Preparation for the opening conference
    6. Evaluating possible nexus-generating activities
  2. Taxpayer best practices during the audit
    1. Procedural aspects of the audit
      1. Setting ground rules with the auditor
      2. Rules for engaging with the auditor, and vice versa
    2. Documentation priorities
      1. For deductions
      2. For credit claims
      3. Other
  3. After the audit
    1. Preparation for and conduct of the post-audit conference
    2. Resolving auditor error and areas of disagreement

Benefits

The panel will give best practices for dealing with these and other key aspects of a state corporate income tax audit:

  • Pre-audit review and planning: Exploring prior audit files to anticipate where the auditor will focus this time.
  • Nexus-related inquiries: Minimizing the chances that you'll be caught off guard by an auditor assertion of taxability in that jurisdiction, particularly as third-party business relationships and use of intangible assets are probed.
  • Documentation demands: Common trends across states in auditors' expectations.
  • Deduction vulnerabilities: Where experience is showing that corporate taxpayers have a weak case against add-backs.
  • Tax credit questions: Which aspects of credit and other incentive claims are particularly drawing scrutiny.

Following the speaker presentations, you'll have an opportunity to get answers to your specific questions during the interactive Q&A.

Faculty

Pilar Mata
Pilar Mata

Counsel
Sutherland Asbill & Brennan

She is part of the firm's Tax Practice Group and emphasizes state and local tax, representing business clients at the...  |  Read More

Richard Jones
Richard Jones

Partner
Sullivan & Worcester

His practice emphasizes state tax litigation and transactional planning involving corporate income, franchise, sales...  |  Read More

Nicole Crighton
Nicole Crighton
Principal, State and Local Tax
KPMG

She joined the firm's SALT Practice in 2008 and later became National Lead of its State and Local Controversy Services...  |  Read More

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