Why is the turn-around time to provide third-party credits in an audit so short (sometimes less than one month) even though the audit could go on for months or even years?

We provide here a written summary of answers provided by the Department of Revenue to the committee at periodic question and answer sessions. These documents are classified as Revenue information issued for informational purposes only for the convenience of PICPA members. Pursuant to 61 Pa. Code Section 3.4, these documents should not be relied upon for any purpose or used in tax appeals. Taxpayers requiring a binding opinion on a specific fact situation may request a written letter ruling under 61 Pa. Code Section 3.3.

Q&A with the Pennsylvania Department of Revenue

Why is the turn-around time to provide third-party credits in an audit so short (sometimes less than one month) even though the audit could go on for months or even years?

Nov 15, 2019
At or shortly after the pre-audit conference the auditor will present the taxpayer with a "Requirements for the Audit Review of Third-Party Credits." In addition to explaining documentation requirements, the form also includes a date by which the documentation should be provided to the auditor in order to be included in the findings of the audit.

The date identified is the date by which the auditor expects to have the initial transactional level review completed. This is based on the industry, relative size of the taxpayer and past audit history of similarly situated taxpayers. This is the established procedure in identifying the date.

However, the actual length of time it takes the auditor to complete the audit is directly related to the taxpayer’s ability to provide timely access to the requested records. If a taxpayer has concerns with the date identified by the auditor, they should at first address
the issue with the auditor. If the auditor does not adequately address the issue, the taxpayer may escalate the issue to the audit supervisor.
 

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These documents provide a summary of the answers provided by the Department of Revenue to the PICPA Committee on State Taxation at its annual question and answer session. These documents are classified as revenue information issued for informational purposes only for the convenience of PICPA members. Pursuant to 61 Pa. Code Section 3.4, these documents should not be relied upon for any purpose or used in tax appeals. Taxpayers requiring a binding opinion on their specific fact situation may request a written letter ruling under 61 Pa. Code Section 3.3.