Beware the Texas Comptroller
The news is all over the press - the State of Texas faces a significant budget shortfall.
The number thrown about is as much as $25 billion dollars.
Governor Rick Perry is steadfast in his position against raising taxes.
A tax increase has about as much chance as the proverbial "snowball in hell".
So how is the State of Texas going to resolve this issue? One way is to increase compliance and collections through audits.
The Texas Comptroller of Public Accounts, Susan Combs, has stepped up her office's audit efforts in recent months.
Reports from the filed are that the audits are more confrontational, with the Comptroller holding small business record keeping standards to the same as large businesses.
Auditors are much quicker to invoke estimation procedures that are not in you're best interest.
The effect? If the Comptroller, through her audit staff, determines that your records are not good enough, or not the "Best Practices" as determined by the Comptroller, they get to use their estimation procedures.
Taxpayers, buckle your seat belt because this ride will not only be bumpy, its going to be expensive and uncomfortable.
You see, once the Texas Comptroller gets to invoke the estimation procedures, the sky's the limit on the your eventual tax bill.
You see, the Comptroller uses all kinds of assumptions and calculations to estimate your sales numbers.
The estimation procedures are slanted toward the Comptroller and to you, the taxpayer.
Those estimation procedures usually lead to to an underpayment situation.
Once that underpayment exceeds twenty-five percent, a fifty percent fraud penalty is automatically tacked on, plus penalties and interests.
Significantly, the fraud penalty also invokes possible criminal sanctions in severe cases.
Keep in mind that auditors are contract employees of the Texas Comptroller's office, and are paid a commission on the amount collected.
They are under no duty to help or assist taxpayers in any way.
So what does this mean to Texas small businesses? Tax compliance has to become a bigger part of your budget.
Take some time to determine what records you have access to and what records you need to start keeping.
Remember that the Comptroller has already used House Bill 11 to monitor purchases from liquor and tobacco sellers.
It won't be long before this program is expanded to include your business.
Contact a professional to assist you with the audit.
The auditors are not there to help you.
You can do most of the work yourself, but rely on a professional to point you in the right direction and give you some pointers.
Organize your records so that you can easily access them in the future.
How do you store them? Do you have back ups? "My records were lost in a flood," etc.
, is not going to help you.
Keep it professional.
If you can't get along with the auditor, call someone to step in on your behalf.
The number thrown about is as much as $25 billion dollars.
Governor Rick Perry is steadfast in his position against raising taxes.
A tax increase has about as much chance as the proverbial "snowball in hell".
So how is the State of Texas going to resolve this issue? One way is to increase compliance and collections through audits.
The Texas Comptroller of Public Accounts, Susan Combs, has stepped up her office's audit efforts in recent months.
Reports from the filed are that the audits are more confrontational, with the Comptroller holding small business record keeping standards to the same as large businesses.
Auditors are much quicker to invoke estimation procedures that are not in you're best interest.
The effect? If the Comptroller, through her audit staff, determines that your records are not good enough, or not the "Best Practices" as determined by the Comptroller, they get to use their estimation procedures.
Taxpayers, buckle your seat belt because this ride will not only be bumpy, its going to be expensive and uncomfortable.
You see, once the Texas Comptroller gets to invoke the estimation procedures, the sky's the limit on the your eventual tax bill.
You see, the Comptroller uses all kinds of assumptions and calculations to estimate your sales numbers.
The estimation procedures are slanted toward the Comptroller and to you, the taxpayer.
Those estimation procedures usually lead to to an underpayment situation.
Once that underpayment exceeds twenty-five percent, a fifty percent fraud penalty is automatically tacked on, plus penalties and interests.
Significantly, the fraud penalty also invokes possible criminal sanctions in severe cases.
Keep in mind that auditors are contract employees of the Texas Comptroller's office, and are paid a commission on the amount collected.
They are under no duty to help or assist taxpayers in any way.
So what does this mean to Texas small businesses? Tax compliance has to become a bigger part of your budget.
Take some time to determine what records you have access to and what records you need to start keeping.
Remember that the Comptroller has already used House Bill 11 to monitor purchases from liquor and tobacco sellers.
It won't be long before this program is expanded to include your business.
Contact a professional to assist you with the audit.
The auditors are not there to help you.
You can do most of the work yourself, but rely on a professional to point you in the right direction and give you some pointers.
Organize your records so that you can easily access them in the future.
How do you store them? Do you have back ups? "My records were lost in a flood," etc.
, is not going to help you.
Keep it professional.
If you can't get along with the auditor, call someone to step in on your behalf.
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