The Department of Tax and Fee Administration technically has three years to conduct a Sales Tax Audit, but when they open up a sales tax audit because of the amount of time that they take, they will frequently ask the client to sign a waiver of limitations. A lot of the times, there’s a lot of pushback from the client not signing a waiver of limitations to get the statute extended but the alternative is if you don’t sign the waiver of limitations, then the Department of Tax and Fee Administration will come in and assess you for the audit liability. As a result of that, you want to make sure that you get the client to sign waivers on time.

However, in the case of a waiver extension, you can use the signing of a waiver to negotiate a faster resolution on the case. You can tell the auditor in a quid pro quo manner, “Okay. We’re going to sign your waiver of limitations but we want to revisit the audit plan or we want to go back to the plant and make sure that we’re meeting our deadlines because what we don’t want is we don’t want this dragging out for another year. The client is tired of this. The client wants to move through this as quickly as possible.” Use the waiver of limitations. Getting the manager involved if you need to to really dictate the tone of the audit and set the clear expectations for how the audit is going to proceed.

There’s no problem in extending the waiver of limitations as long as it’s going to produce fruitful results. If you’re not having success at the audit level, then maybe it’s better to make a decision to go to appeals versus continue to fight it out. In most cases signing a waiver of limitations really doesn’t have any negative effect on your client and therefore, it’s better to just sign it and move on.

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