Walt Arnold Commercial Brokerage

15-13

On November 20, 2014, the Department denied the Taxpayer’s application for a managed audit.   On December 8, 2014, the Taxpayer protested the disqualification.  After the Taxpayer filed a protest, the Department provided a letter stating that the managed audit application was denied because the Taxpayer had received two or more non-filer notices. The Taxpayer has been in business since 1990. From October 2011 through July 2014, the Taxpayer contracted with a bookkeeper. During that time period, the bookkeeper transferred money from the Taxpayer’s accounts to her personal account, and she had failed to file or pay many required taxes, including the Taxpayer’s gross receipts taxes.    Since June 2014, as well as the time prior to the original bookkeeper’s departure, the Taxpayer has timely filed and paid its gross receipts taxes.  The Taxpayer hired a forensic accountant, filed a police report and hired an attorney to recoup the monies taken from the business.  It also took steps to reconstruct its business records. The Hearing Officer found the testimony of the Taxpayer’s owner credible in that he never received the non-filer notices. The Department failed to prove that the non-filer notices were mailed in the ordinary course of business.  During the hearing, the Department attempted to add another reason for the disqualification into the managed audit program. This argument was rejected by the Hearing Officer.  The Taxpayer met all the other criteria for a managed audit except that it must show the Department that it has an acceptable system of internal controls and business records.  The Taxpayer’s protest was granted.