The State Audit I've been working on for the last few months came to a grinding halt yesterday with my client getting screwed! The auditor handed me a bill for around half a million bucks and accused my client of defrauding the state on sales tax.

I've already been to the lawyer's office and we're meeting with him again in the morning to go over options.

This is ridiculous and for the life of me I can't find where the damn auditor got some of his figures -- they're sure not in anything I have and my client is in shock.

This guy (the auditor) is saying he didn't have "enough" markup on his goods and is charging him tax on what he "should" have marked things up - huh? According to "industry standards"! huh? What happened to FREE INTERPRISE?

I'm so upset I could just spit. Ya'll would have been proud of me. I didn't deck the guy when he told me it was cut and dry and my client might as well pay it cause we didn't have a chance in appeals. I just smiled and said, "But we might in Federal Court!" He asked me if I'd talked to a lawyer. "Of course, do I really look that stupid> I've dealt with you little boys at the state before." He packed up his stuff and left.

So now we've got "months" of sorting thru 4 years of stuff and a bunch of crap to get this straightened out to keep this guy in business. And he may have to file bankruptcy to keep his assets on hold while we do it just to protect him. Something just isn't right about this.

End of rant.

Hugs BD

Unless there are minimum markup laws on the books in TX....

Don't laugh - we have 'em on gasoline in WI.

Lawyer Bill says he thinks there's enough loopholes in the audit to drive a mack truck thru...

Apparently he's in a case in Federal Court now on the same thing and there's enough precedence (or rulings or whatever) to win.

This guy just didn't get the point that you can have an INVENTORY that you don't pay TAX on till you SELL it. It's an ASSET on the balance sheet!!!!

So now I've got to go thru this BIG liquor store and COUNT every bottle and can and compare invoices against sales prices and then figure all this stuff and ...... my head is already hurting (not CH just tension!). (An NO CHUCKLES - you CANNOT help - I can't afford YOU! but it would lessen the inventory  ;) )

HUgs BD

Does TX have a minimum mak-up law on the books?  I know that in LA, any item has to be marked up at least 6 %.

Carolyn

wrote on Oct 7^th, 2008 at 6:32am:

Unless there are minimum markup laws on the books in TX.... Don't laugh - we have 'em on gasoline in WI.

And beer, TV's sets, auto parts, hardware................ :-/

Agostino Leyre wrote on Oct 7^th, 2008 at 10:13am:

wrote on Oct 7th, 2008 at 6:32am: Unless there are minimum markup laws on the books in TX.... Don't laugh - we have 'em on gasoline in WI. And beer, TV's sets, auto parts, hardware................ :-/

Capitalism is a mere hollow shell of what it once was.

That's exactly what they (California State Francise Tax Board) did to me when I sold the bar.  3 year audit with dental tools, everything was perfect, but they decided I didn't make enough money and I had to be magically hiding it.  They decided what a proper margin was, looked at all my purchases and came up with my income out of thin air.  The restated my income for 3 years and handed me a huge tax bill.  I fought and fought and fought, eventually they relented and *only* charged me several thousand dollars.  he original bill was close to $100k.

"Of the people, for the people, by the people......."  

My ass!

I don't know much of these things but it sounds as if the govt is defrauding the people.  I would have this guy contact his local councilman/woman, Congressman/woman.  Its a pretty good way to get things done in this part of the world

Once upon a time......


Anyone read the Communist Manifesto recently?

catlind wrote on Oct 7^th, 2008 at 11:15am:

Once upon a time...... Anyone read the Communist Manifesto recently?

Why? It was piss-poor reading the first time. ;)

As far as I know Carolyn TX doesn't. They're going by "industry standards" whatever that is. He's saying it's 25% and he's averaging my client out at 22%. Geezzz! Maybe he's selling cheaper than his competitors???

He's got several liquor stores... some are making profits and some are showing a loss. He's taking one in particular and saying it cannot loose and stay in business. My comeback was - Wall Street's been doing it for years!

I have a bottle of valium I got filled in 2005 -- I'm actually thinking of looking for that bottle and taking one. That's how upset this has made me. I've been up since about 3:30 this morning going over these books and I can't figure out where this guy got his numbers. Maybe I should have picked up a bottle (stickly for medicinal purposes you understand) of something for my flu while I was in the liquor store yesterday.  :)

Hugs BD

Makes you wonder why people still try to get here.....

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Charlie

How can you go broke selling alcohol in Texas?  :D

Racer1_NC wrote on Oct 7^th, 2008 at 4:40pm:

How can you go broke selling alcohol in Texas?  :D

Mix it with a bureaucrat trying to exercise his awesome powers.

Grinner62 wrote on Oct 7^th, 2008 at 8:24pm:

Racer1_NC wrote on Oct 7th, 2008 at 4:40pm: How can you go broke selling alcohol in Texas?  :D Mix it with a bureaucrat trying to exercise his awesome powers.

ROTFLMFAO. That comment wins.

Then again, we do still have some places in Texas that are dry....

Agostino Leyre wrote on Oct 7^th, 2008 at 10:47am:

"Of the people, for the people, by TO the people (up the ass)......."  by the government

There, Thomas, I fixed it for you ...

I think it might be time for all of us to head for shelter!

I think I see smoke rising up from down Texas way ...

Meek and sweet Granny Barb is about to blow, and once she does HEAD FOR THE SHELTERS!

Chuck

[smiley=JAW_DROP.gif] (Did I REALLY call her "meek and sweet" ??)   [smiley=hurl.gif]

ClusterChuck wrote on Oct 8^th, 2008 at 12:12am:

I think it might be time for all of us to head for shelter! I think I see smoke rising up from down Texas way ... Meek and sweet Granny Barb is about to blow, and once she does HEAD FOR THE SHELTERS! Chuck [smiley=JAW_DROP.gif] (Did I REALLY call her "meek and sweet" ??)   [smiley=hurl.gif]

Well, she could just declare us an independant nation again instead... XD

Met with Lawyer Bill early this morning and I'm feeling better than yesterday. I think we've got enough to hang the auditor and maybe win this thing. We found some more loopholes this morning. Client feels a little better, but I'm gonna be working my rear off for the next few months.

And the sad part is it's still going to cost my client a bundle for legal and accounting fees. But not 1/2 million.

The "dry" places in Texas is what keeps the gas and liquor stores in business down here :) -- This auditor figured his markups by "cans" - he didn't factor in that us in the dry areas buys by "bulk"! Have a fridge in my barn just for that purpose. Geezzz - thought everyone knew that. Where do they get these 'revenue" guys...

Hugs BD

I think they are the people that flunked the postal exam!!!!! ;D

Jimmers

Barb,

When they tried to screw me over by claiming my revenues were higher than I claimed, I pointe out the following:

- every sales tax filing they checked matched perfectly with the cash register tapes (detail) that I kept
- every purchase also checked out with all of the vendors (they compared my stated total purchases with what the vendors said they sold me, alcohol is tracked like nuclear weapons)

Even still, they claimed I was not showing an 'industry standard' profit margin, so they recalculated my profits based on my purchases and multiplying by their industry standard markup.  this resulted in a massive difference for the 3 year period they were auditing (using only 3 sample months)

Mistakes they made...

- they counted my soft drink purchases as things I would resell.  Fact is the soft drinks are mixers and rarely sold as a soft drink, so the 'markup' was completely flawed.

- they failed to account for Happy Hour, which represented the majority of sales in any given day, and which was at a price far below their 'industry standard'.

What was weird was every time they got close to finalizing the amount that I supposedly owed, they would call me to review their report and try to get me to 'agree' with the report.  The only thing that saved me was my absolute refusal to agree with them that I owed them a single penny.  As a result, they had to keep escalating it within the Francise Tax Board, and eventually I got to argue my case to a the supervisor of the supervisor of my auditor.  I said things like 'this is no different than 14th century Europe where the King just invents taxes when he needs money'.  To my utter surprise, they included those comments in the final report, and eventually they relented (mostly).  I still ended up giving them a few thousand dollars, but it was robbery and I told them as much.  Still, I was impressed that I was allowed to argue and get the bill reduced by almost 98%.

-Shawn

(btw, the tax bill that got reduced was this one, not my $672,000 IRS bill from the options debacle... I had to pay that one in full plus interest and penalties)