As former State tax auditors, the Downey, Smith & Fier team will level the playing field and provide your company with a technical resource.  Our professionals both understand state audit techniques and audit policies, but also has the experience to resolve issues/inquires before they become larger issues. Our active management approach ensures that your audit does not spiral out of control; we take every precaution to avoid an audit nightmare and manage issues, known or unknown to you, verses allowing Auditor’s to drive the process. Our approach insures “Your issues, becomes our issues.”

Are you currently under audit?  Have you recently received an audit notification?

Is your audit on track for quick resolution?  Are there questions or inquiries that you are evaluating how best to respond?  

Has an assessment been issued or proposed?  


We tailor our audit management and representation services based on each client’s needs. But, at the core of our audit defense philosophy is to understand your business, its transactions, its strengths and limitations. Very early in our process we also search for overpayments or refunds that could offset or reduce any exposure. State auditors focus on transactions where no tax was paid, we explore the exact opposite (all tax paid transactions), and identify overpayments to hit auditors with refunds early in the process.   

State tax audits generally involve examining two type of transactions: based on sales; or based on consumption/use of goods. Which type of audit is yours?  

Sales Based Audits:

States rely on industry specific audit techniques to examine and verify reported amounts, including many indirect audit techniques such as mark-up, cash to credit ratios, observations, etc.  State auditor often generalize or make errors when implementing these techniques that can lead to grossly overstated or inflated proposed assessment.

As sales volumes increase (primarily non taxed transactions), states employ sampling and other estimation techniques to assert additional tax due.  One size does not fit all. Taxpayers should provide input during the set-up to validate the appropriateness of the testing and ensure representative results.  

The current trend: State audit team now include Computer Audit Specialist to manipulate and analyze taxpayer data.  What is your data telling them? DSF can help you to understand your data. Learn more with our free consultation.


Consumption/Use Based Audits:

Most state’s sales and use tax laws provide very strict rules related to whom an auditor may hold responsible in a purchase transaction.  State auditors often shift the responsibility for claiming exemptions or exclusion to the purchaser, with taxpayers being responsible for documenting refunds and overpayments.  Are you being assessed too much? Do you have refunds or offsets available?

Most states use sampling to examine purchases to identify and estimate additional tax due.  These same samples may not be sufficient or designed to address issues that are favorable to taxpayer. Learn more with our free consultation.   

If a formal assessment has been issued or you recent paid an audit assessment, we can still help.  Knowing your appeals rights can help to avoid costly collection action and business disruptions. But, timing is critical as state statutes generally provide very specific deadlines.  

We can help you to understand and navigate the process to best resolve your audit, whether it’s requesting reconsideration at the field audit level, filing a formal appeal, preparing a settlement request or submitting an offer-in-compromise.

We have working relationships at all levels of state tax agencies.   Our professionals are ready to assist. Don’t wait, call us today.

Give us an opportunity to help.