Elected Officials Working on Sales Tax & Use Audit Issue

Letter from Representative Kath to Commissioner Frans asking
 about small business struggles with Sales Tax & Use  Audits

Recent responses from both Senator Parry and Representative Kath regarding struggles OACCT members are encountering with the MN Dept. of Revenue on Sales Tax & Use Audits are encouraging that we're being heard.

The OACCT waits anxiously to hear a response from the Dept. of Revenue or our elected officials.

Below are a couple of examples of how the sales tax and use audits effect us locally:


An example is an anonymous OACCT member sharing their experience as a local business accountant.
“…the big concern was the number of auditors the state had hired and the "return on investment" these new auditors were required to earn.  It seemed the state was putting more pressure on short term returns, for budget reasons, than long term compliance.  This put pressure on the auditors and their attitudes changed to a more aggressive and less forgiving attitude.”  

Another OACCT member, Ag Power Enterprises, recently went through this audit and felt confident to identify themselves and share their experience.
“The audit lacked a plan.  The auditor did not start by attempting to get an understanding of our business.  That ultimately resulted in him missing huge segments of the business transactions.  His sampling techniques were random.  The documentation said he wanted to look at changed several times over the audit, so his effectiveness at uncovering problems was poor.


There seemed to be several good learning opportunities but he just dropped them.  The audit report at the end of the audit was strictly a justification for applying our percentage of shortage from one or two months to the entire 27 month audit period.  There should have been a narrative report that articulated our shortcomings so that we have a plan of improvement.  That seems like a missed opportunity and points to a more punitive posture than a teaching posture. 


We are pretty good at complying with sales tax rules at Ag Power, but even so, there are several complexities that have tripped us up.  There should be a process of giving a warning about an issue and then going back for a second audit that checks to see if the needed corrections have been made.  From my CPA experience, I would say that that process should especially be available for very small businesses.  Small business owners are jacks-of-all-trades and can easily miss sales tax rules.


Taxpayers deserve more professionalism and business friendly procedures out of the Department of Revenue.”
-David Allard, controller, Ag Power Enterprises