Sales Tax Audit Defense – Exploration & Production
By the Numbers
99.26%
Tax assessment reduction achieved by Invoke at audit level
$20.77M
Net savings to date, including tax, penalty, and interest
$1.26M
Savings currently in settlement
Key Takeaways
Secondary Review
Invoke performed a secondary review of a five-year-old Texas sales tax audit to verify results achieved by the client’s initial consulting firm
Turnaround
Invoke returned the review in eight months, netting more than $20M in savings to date
Knowledge
Invoke leveraged its knowledge of the Comptroller’s options for contesting disagreed audits to maximize reductions/refunds, efficiently resolving the audit by sending certain issues to redetermination and others to settlement
ISSUE
Invoke Tax Partners’ client, an Oil & Gas producer (E&P), was audited by the Texas Comptroller of Public Accounts for sales and use tax compliance. The taxpayer initially employed another consultant for audit defense services.
After five years with another consulting firm, the Texas Comptroller sought to finalize and process the audit as a net tax assessment of approximately $14.73M plus an estimated $6M in penalties and interest. The taxpayer then engaged Invoke to perform a secondary review of the initial consultant’s audit defense services to ensure the tax assessment was valid.
APPROACH
During the audit, Invoke worked with the client and its vendors to obtain documentation to support reductions to the assessment. Invoke met with Texas Comptroller personnel to discuss specific transactions and present documentation to support our findings. Several nuances and creative consulting went into this process including:
- Approaching the auditor for initial assessment reductions
- Working closely with vendor contacts
- Applying intimate knowledge of tax law
- Utilizing sharpened negotiation skills
- Engaging client down to the operational level
- Investing time in client’s online systems to find necessary documentation
Invoke leveraged its knowledge of the Comptroller’s options for contesting disagreed audits to maximize reductions/refunds, efficiently resolving the audit by sending certain issues to redetermination and others to settlement
RESULTS
Approximately eight months after being engaged for a secondary review, Invoke was able to reduce the net sales tax assessment of $14.73M by 99.26% to $109K. Invoke then requested a redetermination hearing, and the audit has since been amended to a net refund of approximately $38K. The audit may be reduced further due to two issues that must be addressed by the Texas Comptroller’s Settlement Group, with $1.26M currently under appeal.
Rory Dyck
Director of Operations, Sales and Use Tax
Lead Consultant
For more than eleven years Rory Dyck has been an integral part of the growth experienced within Invoke and has excelled in the management and execution of the firm’s largest and most complex Sales Tax Audits. In his current role, Rory oversees the daily business activities of the Sales and Use Tax department. Drawing on his experience, Rory leads the Sales and Use Tax Department by managing resources, growing staff, implementing operational best practices, and developing best in class project technology. During his time at Invoke, Rory has expertly navigated large complex sales tax audits and has completed hundreds of sales tax refunds across the United States, with a primary focus in Oil & Gas, Manufacturing, Transportation, and Restaurants. Outside of Sales and Use Tax, Rory also lends critical support in Invoke’s Severance Tax and Gross Receipts Tax engagements.
