Why is a Taxing Division desk audit not an “audit” for the purposes of triggering the six-month period to file a refund under 72 Pa.C.S. sec. 10003.1(b)? 72 Pa.C.S sec 10003.21(b) does not appear to distinguish between a desk and field audit.
TRC § 3003.1(b) provides that “[t]he Department may grant a refund or credit for all tax periods covered by a departmental audit. If a credit is not granted by the department in the audit report, the taxpayer must file a petition for refund within six months of the mailing date of the notice of assessment, determination or settlement.” 72 P.S. 10003.1(b) (emphasis added).
In 2006, the Commonwealth Court held as follows:
The term "audit" is defined in Webster's Third New International Dictionary as "a formal or official examination and verification of books of account"; "a methodical examination and review of a situation or condition . . . concluding with a detailed report or findings"; and "the final report following a formal examination of books of account." Webster's Third New International Dictionary 143 (1986). Thus, based on the foregoing dictionary definition, the terms "audit" and "report" may be construed to be synonymous as used in Section 703 of The County Code. (16 Pa. Stat. Ann. § 703). In re Elk County Auditors; 903 A.2d 652 (Pa. Commw. 2006).
It is our interpretation that a departmental audit is a formal examination and verification of a taxpayer’s books and records by the Department of Revenue concluding with a detailed report or findings. In re Elk County Auditors; 903 A.2d 652 (Pa. Commw. 2006). In practice, a departmental audit is performed by the Department’s Bureau of Audits. It may be performed by desk audit in the offices of the Department or by field audit in the offices of the taxpayer or its representative.