The New Jersey Division of Taxation is on the attack again.
Fifty (50) new employees have been hired to audit bars and restaurants
with liquor licenses to extract more taxes from the business of their
owners. The Division of Taxation attempts to take advantage of the
poor record-keeping of many small businesses by grossly exaggerating income
during the audit. This causes an increase in Sales Tax, Corporate
Income Tax, and Gross Income Tax of the owners of the business!
Not a Simple Audit
The Audit process starts with a Notice from the Division
of Taxation scheduling an audit. Unlike a normal audit, this audit
is designed to "prove" that the business is understating income.
Using elevated profit percentages, the auditor greatly inflates gross income
resulting in a large tax increase. When penalties and interest are
added, the result could cost a small fortune.
How Should You Respond?
Although some business owners mistakenly believe that "cooperation"
by not being represented will make the business look better, that is Not
True!
Do not call or contact the Division of Taxation
Investigator.
Do not let the audit start without Legal Representation.
Engage a tax attorney, in addition to your accountant to
represent you during the audit process.
Defer all of the Auditor's questions to your tax attorney
and accountant.
Gather your accounting records and all tax returns for the
years being audited.