Knowledge Center

Tuesday, May 27, 2014

With states turning more and more to third-party auditors to find unclaimed property and generate revenue without raising taxes, state tax practitioners have by default become the private-sector's first line of defense.

In a recent article by Maria Koklanaris and published byTax Analysts, HMB's Jordan Goodman is quoted several times.

In the article, Jordan says that his clients need him for damage control. An unclaimed property audit, he said, is never a situation involving one client and one state.

"Initially, you get a notice from either the state or one of the third-party agencies representing the state saying they want to come out and do an audit and do it for a couple of states, and that's when you have to immediately spring into action and try to limit the states that they're representing," Goodman said.

Goodman said that just three active audits can occupy 15 percent of the time he spends working. He said the part of the process spent trying to get the auditor to enter into a nondisclosure agreement (NDA) can drag on for weeks or months because the client's leverage is limited.

"The only leverage you have during that period of time is that you're not going to give up any records until they sign an NDA," Goodman said, adding that even during that process, more states may join the audit. "So you start off with three and all of sudden you're at 12, and your client starts freaking out."

To read more, please visit the Tax Analysts website or search for the article using this citation:

State Tax Notes, May 26, 2014, p. 455; 72 State Tax Notes 455 (May 26, 2014)

Founded in 1970 as a nonprofit organization, Tax Analysts is a leading provider of tax news and analysis for the global community.

 

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