Contingent-fee audits may be popular in other states, but not in Colorado, John Vecchiarelli, Senior Director of Taxation at the Colorado Department of Revenue, told Walt Nagel, Don Griswold, and Jeremy Abrams, all with Crowell and Moring's state tax team. Vecchiarelli's comments were part of a larger interview in which he, along with Barbara Brohl, Executive Director of the Colorado Department of Revenue, spoke candidly about current tax issues facing the state, including the regulation of the adult use of marijuana, as well as sales tax collection, and the impact of California's recent "Gillette" decision.
Colorado has no stated policy position, but we have never used contingent-fee based arrangements with any of our audit resources, ever, Vecchiarelli said. This really was in reaction to industry's concerns, he went on to say. "They told us they don't like that because, if you put that incentive out there with auditors, they'll push the boundaries to a level that makes it almost impossible for businesses to interact constructively with them."
However, Brohl noted that the state's participation in the Multistate Tax Commission's audit programs has helped the state quite a bit.
Even a contract audit doesn't have to be done on contingency; it can be done on a flat hourly rate, Vecchiarelli explained. But most jurisdictions want that auditor to be a little bit more aggressive and not just sit there for 20 hours and say I got a zero adjustment, he said. They come up with something, but we have never done that, Vecchiarelli said. "There's enough low hanging fruit that you don't really have to go to extremes to find these issues."
Check out the complete interview with Vecchiarelli and Brohl here.
In other developments…
Internet Sales Tax Could Reap $23 Billion For States , by Stateline, the Daily News Service of the Pew Charitable Trusts.
House Bill 500's franchise tax benefit for Texas movie theater operators , by the Texas State & Local Tax Law Blog.
Academic Research Lacks Consensus on the Impact of State Tax Cuts on Economic Growth , by the Center on Budget and Policy Priorities.
Compiled by Priya D. Nair
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