by Brian Mahany
Business owners and corporate CFO’s all agree that tax audits aren’t fun. Let’s face it, “audit” is a dirty word. As our economy still continues to sputter, many state and local governments are getting frantic – the money needed to fund government simply isn’t coming in fast enough. What will the politicians do? You decide the answer.
There are really just 3 choices. Raise taxes (not politically popular), cut spending (also not popular among those receiving the spending) or collect more from existing taxpayers by increasing audits. Guess what many tax authorities are doing?
The Wall Street Journal reported in May that New York State has increased audits of restaurants by 60% in the last year (restaurants are notorious for not running cash through their books.) Reuters ran a story this week about the spike in state sales tax audits. Texas is hiring bounty hunters to look for money – private CPA’s authorized to augment state audit staff and get paid for auditing local businesses.
Statistically, the chances of being audited are still low but sales tax audits of businesses are growing at a rapid pace. Chances are that if you run a business that deals with cash or makes large investment in machinery and equipment, you will be audited by the state. Sales and use tax audits are the leading revenue source for many states. When coffers are dry, states know where to look for quick cash.
Now is the time to make sure your financial house is in order before the tax man comes knocking. If you are already under audit and have substantial tax compliance issues, hire a tax attorney immediately. Not only can a lawyer help reduce tax and penalties but serious compliance problems are often referred for criminal prosecution.
It’s much easier in the early stages to keep an audit from becoming a criminal referral than to stop one once the matter has been referred for prosecution.
The tax lawyers at Mahany & Ertl, LLC can help with a wide variety of IRS and state tax matters including collection, criminal tax (tax evasion, failure to file) and audit defense. Brian Mahany is the former head of Maine’s state revenue agency and has years of criminal, audit and collection experience. For a confidential consultation, contact attorney Brian at (414) 704-6731 (direct) or by email at
Mahany & Ertl, LLC – America’s Tax Lawyers. Offices in Milwaukee, Wisconsin; Detroit, Michigan; Portland, Maine & San Francisco, California. Services performed nationwide.