State of Nevada Department of Taxation – Compliance Division The

State of Nevada Department of Taxation – Compliance Division The Audit Process

Responsible for ensuring taxpayers are in compliance with the reporting requirements for the various taxes administrated by the Department We conduct audits locally within the State of Nevada as well as across the United States Programmatic selections – internal criteria Taxpayer tips Field observations Audit Section

Requested a large refund of taxes – need to verify You are closing your business You are selling or buying an established business Random Selection Audit Section other factors Why Are You Getting The Phone Call? Most common question from companies is; “Why are you auditing me?” Any business has an audit potential every three years

Sales and Use Tax Liquor Modified Business Tax Tire Tax General Business Financial Institutions Cigarettes Other Tobacco Products Live Entertainment (non- gaming) Other Excise taxes Net Proceeds of Minerals Commerce Tax Passenger Connection Tax Abatement Contracts What Taxes Do We Audit?

NRS 360.355 Registered and Filing Returns: Three (3) years Not Registered or Not Date the return was due or the date the return was filed Whichever occurs later Filing Returns: Eight (8) Years What Time Period Are We Auditing?

Initial contact will be attempted via phone Using number listed on your account If we can’t reach you a letter will be sent asking you to contact the auditor Using address on file If unsuccessful an potential estimated audit will be developed Auditor Contact During the initial contact: Learn about your business Ask about your records Schedule the appointment Confirmation Letter sent

Sales Tax Returns Supporting Document Chart of Accounts General Ledger Sales Journal Resale Certificates Exemptions Letters Shipping Documents Verifying total sales were reported correctly Verifying exemptions were properly documented Verifying all sales tax collected was reported Federal Income Tax Returns Z-Tapes, POS Reports Sales Invoices Records Needed for Sales Tax

Chart of Accounts General Ledger Credit Card Statements Bank Statements Fixed Asset Schedule Corresponding Purchase Verifying sales tax was paid on all purchases for use within the business If sales tax was not charged verifying use tax was reported properly Invoices Contracts Records Needed for Use Tax

Modified Business Tax (MBT) Returns Supporting Documents Employment Security Division Form 4072 Unemployment Health Insurance Invoices Paid by the company Health Insurance paid by Verifying correct wages were reported Line 3 of ESD to Line 1 of MBT Verifying proper health insurance was claimed Amount paid by the company less the amount paid by the employee the employees Records Needed for (MBT)

The auditor will let you know what records are required to complete the audit Examples: Live Entertainment Admission Charges Tire Tax Ledger for tires sold Liquor Purchase Invoices from approved wholesalers If Your Company Has Other Taxes:

Estimated Completion Date (ECD) This the date we must finish the audit Not how long we will be at your place of business NRS 360.232 Field work timeline is dependent on your documentation and the complexity of your business Standard is one week How Long Will The Audit Take?

The Department uses The auditor will always sampling methods whenever possible request a walk-through of the business Sales are customarily done on a three month sample Helps the auditor to: Extra-ordinary items are Gain understanding Ask appropriate questions not sampled Assets are customarily reviewed for the whole timeframe How Much Will The Auditor Need?

Field Work Completed Audit Packet Preliminary (Draft) Certificate of Service Schedules To determine if there are any outstanding items before the audit is submitted for review There can be multiple revisions as this point Exit review/discussion Audit Documents: Petition for Redetermination Deficiency Notice Final Schedules Audit Exit Letter Survey

Do You Agree? Do You Disagree? Two Options Fill out the Petition for Pay the audit by the due date Prior to the due date contact your Revenue Officer to make other payment arrangements Pay on-time to avoid an additional10% penalty Redetermination Form Prior to the due date send form back to the Department Include additional documents with petition if necessary What To Do When You Receive The Audit Packet In The Mail?

If you are still not in agreement with the audit findings after the redetermination is complete you are entitled to request a hearing This form will be provided in the packet with the redetermination findings The hearing will take place with an administrative law judge and they will issue a finding after the hearing Rights After Redetermination

If you do not agree with the Administrative Law Judge’s finding you (or the Department) can appeal the decision to the Nevada Tax Commission Once heard by the Nevada Tax Commission the Department must follow their orders however, your company can appeal the decision to district court and potentially all the way to the Nevada Supreme Court Rights After Hearing

Please be advised that any responses by the Department made to taxpayer inquires are only binding if they are in writing, such as Nevada Revised Statutes, Administrative Code, Technical Bulletins, Nevada Tax Notes and other written correspondence The audit report you receive is considered written advice and can be relied upon Reminder

Department Of Taxation Contact Information Hours: Monday through Friday 8:00 AM to 5:00 PM Grant Sawyer Office Bldg 555 E. Washington Ave. Suite, 1300 Las Vegas, NV 89101 2550 Paseo Verde Pkwy Suite 180 Henderson, NV 89074 Call Center 1-866-962-3707 1500 College Pkwy Suite 115 Carson City, NV 89706 4600 Kietzke Ln Bldg L, Suite 235 Reno, NV 89502