Issue: A large manufacturer constructed a new service line for its California facility and generated $4,000,000 of Manufacturer Investment Tax credits. A few years later, California auditors denied the credit due to a lack of documentation. Since the taxpayer had utilized the credits on previous returns the California Franchise Tax Board issued a $4,000,000 assessment, not including penalties and interest. The taxpayer unsuccessfully attempted to resolve the issue themselves and subsequently hired a big accounting firm. However, the taxpayer and the accounting firm were unable to resolve the issue without the documentation to substantiate the claim.
The Solution: Through keen technical knowledge we were able to identify a tax law that required alternate methods to substantiate the claim. We were able to utilize records from the taxpayers fixed asset group and the capital expenditures group to substantiate the dollars involved. In addition, we provided the auditors with a tour of the facility to provide further evidence of the new service line. The taxpayer had been fighting this audit for years and after a few months we were able to obtain 98% of the credits claimed and penalties abated.
Issue: The taxpayer goal was to increase its operating cash flow by mitigating its tax liability.
The Solution: We analyzed the state tax returns and identified that the taxpayer was inadvertently filing separate returns in Arizona, which resulted in large tax payments. We discovered that one of the subsidiaries had large net operating losses that could be utilized to offset the income of the other unitary members. We prepared complex financial models that consolidated the taxpayer entities utilizing an unitary methodology. As a result, of making the unitary election the taxpayer recovered over $3,000,000 in overpayments.
Issue: The individual taxpayer was unable to pay a $2,500 IRS tax bill.
The Solution: We analyzed the IRS noticed and learned that the bill was generated by a creditor who wrote off the taxpayer's debt. When the creditor wrote off the taxpayer's debt, it created income for the taxpayer. We gathered financial information from the taxpayer and learned that the taxpayer was insolvent. We created worksheets and schedules responding to the IRS notice claiming the insolvency exemption. In 6 weeks the IRS responded with a $0 amount due.
No matter the size of your complaint the CPA’s at Barbee Tax Consulting, LLC can provide resolution. Complete the inquiry form to be the next success story.