Situation
A prominent bank was going through a growth spurt building multiple branches in the Tri State area. They had hired their accountant (part of the Big 4) to do a sales tax audit. They were told by the firm that they qualified for a $500,000 refund. When the firm went to the state, their claim was rejected but the accountants sent them a bill for close to $200,000.
Action
Needless to say, the CFO was not very open to speaking with us when we began our discussion. I explained that our team was headed up by the former Deputy Director of the Division of Taxation and that all of our auditors were former state auditors. These former auditors knew what to look for. The topic we focused on was “What is classified as real property”?
The bank had hired a contractor to build granite counter tops. During our analysis we found the contractor had paid taxes on the granite when it was purchased from the supplier. Once the counter tops were made, they became real property. This is a tax exempt transaction.
We also found similar evidence dealing with bank boxes and cash machines. As a result of our efforts, the bank received a $5,000,000 refund.
