The Tax Commission uses the Auditing Division to conduct state income tax audits. Currently, the Utah State Tax Commission is increasing the number of tax audits it conducts, and these audits can be complex. The seasoned Utah tax attorneys at Pearson Butler may be able to help limit the scope of the audit and prevent additional years from being audited.
To discuss your needs and concerns regarding a state income tax audit, call the firm at (800) 265-2314 and arrange a confidential consultation.
About Income Tax Audits
Utah income tax audits are done primarily as office audits. Auditors cross-match state and federal return data, verify that all income reported on information returns has been included on the state return, confirm that deductions taken on the state return are valid, make adjustments based on audits conducted by the Internal Revenue Service, and conduct domicile investigations.
What Will Happen During a State Income Tax Audit?
The following is an overview of the state income tax audit process in Utah:
- Opening Conference: The taxpayer has an opening conference meeting with a member of the State Auditing Division. It is prudent for the taxpayer to have an attorney attend the conference. The state will explain the scope of the audit and which types of taxes they are examining, which time periods they are covering, and which types of records they are reviewing.
- Division Conference: The taxpayer may communicate any questions or concerns to the auditor during the audit process. If a dispute arises, the taxpayer may request to speak with the auditor’s manager.
- Preliminary Notice: Once the audit is completed, the State Auditing Division sends outs a Preliminary Notice letter that explains the audit’s findings and a tax assessment if the audit discovers an underpayment of tax. Although the Preliminary Notice is not a final assessment, the taxpayer only has 25 days to review and informally discuss the findings with the State Auditing Division. If the taxpayer requires additional time to review the Auditing Division’s findings, the taxpayer may request an extension. The taxpayer may also pay the tax assessment during this disputing phase to stop the interest from accruing.
- Statutory Notice: Once the 25 days have passed, and if the Auditing Division does not grant an extension, the Division will issue a Statutory Notice, which is a legally binding tax liability assessment. The taxpayer may appeal the Statutory Notice by submitting a written appeal within 30 days. Otherwise, the Statutory Notice will become a final assessment and the taxpayer will be required to make full payment of the tax liability at that time.
Should I Hire an Attorney During My Audit?
As a taxpayer, you have the right to legal representation during a State Income Tax Audit. In fact, the State Auditing Division is accustomed to working with representatives of the taxpayers being audited. However, you have the right to represent yourself, just like an individual being prosecuted on a criminal matter has the right to represent himself or herself.
If you think there are issues that could cause substantial tax liability (such as filing an inaccurate return), you may be prudent in talking with a knowledgeable tax attorney. An experienced tax lawyer can review your tax return and identify which schedules are more likely causing concerns with the Auditing Division.
If you would like more information on state income tax audit representation, contact a tax attorney at Pearson Butler now. Call (800) 265-2314 for a free initial consultation.