Requests for a sales tax refund in Pennsylvania could require
taxpayers to first agree to an audit under a new policy under consideration by
the Pennsylvania Department of Revenue.
In a draft bulletin, the DOR
said it is considering changing its procedure for reviewing "large and
complex sales and use tax refund petitions" by addressing them
"through the field audit process." The draft bulletin was distributed
to a limited number of practitioners and has not been posted on the
department's website. The department is still reviewing the draft bulletin and
no publication date has been set.
If finalized as written, however, the DOR could choose to audit a
company as soon as it files a refund request at the Board of Appeals, which
could dissuade taxpayers from filing refund petitions at all and well as lengthening
wait times for refunds. A number of practitioners who have reviewed the
proposed policy termed it "a retaliatory audit provision," or "a
scare tactic for the wary taxpayer who would not want to subject themselves to
an audit."
"The decision to conduct a field audit will be at the
discretion of the Department, but in general, large or complex refund petitions
or recurring issues are more likely to be referred for a field audit," the
bulletin says.
The term "large and complex" has not
been defined under the proposal, which could lead to the threat of audits for
virtually any business entity, especially if this tactic is employed in states
where the additional revenue from foregone refunds is used to supplement state
tax revenues.
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