Sales & Use Tax Case Study – Texas Oil & Gas

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

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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

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Turnaround

Invoke returned the review in eight months, netting more than $20M in savings to date

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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:

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.

Director of Operations, Sales and Use Tax

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.

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