201007707L



Date: July 8, 2010

AP 124

To: Audit Staff

From: David Rock

Subject: Documentation of Contested Items for Hearings

Effective immediately, in order to accurately communicate adjustments that are 
needed on audits/refunds that are in the hearings process, the attached 
electronic spreadsheet must be provided to the hearings attorneys.  This 
spreadsheet is the only acceptable means of documenting any decision in the 
hearings process to accept and/or deny individual transactions for sales and 
use tax/direct pay audits and refunds. No new columns can be added to the 
worksheets.  The auditor is the only one authorized to prepare or make changes 
to the spreadsheets for use in the hearings process.  The new procedure makes 
both the auditors and the attorneys aware of all issues before the hearings are 
finalized. 

The auditor should extract the WATS transactions to eliminate having to 
manually enter the agreed/disagreed items to the approved worksheet.  If the 
audit contained supporting excel worksheets, such as those commonly prepared on 
convenience store audits, the revised excel worksheets should also be provided 
to the hearings attorney.  

Audits/Refunds Forwarded to General Counsel at the 61st Day 

The auditor will document his agreement/disagreement with transactions examined 
during the 60-day period.  At the end of the 60 days, audits/refunds that will 
continue through the redetermination process should be forwarded to General 
Counsel via Agency Work Manager (AWM) Pre-Hearings window.  The auditor will 
comment on the pre-hearings screen that an excel schedule with agreements is 
available for the hearings attorney on request.  When the case is assigned to 
an attorney, the attorney will e-mail the auditor and copy the 
supervisor/manager to request the electronic spreadsheet documenting the 
agreed/disagreed items.  The audit/refund will also be routed back to the 
auditor on AWM with the task “Perform Post Audit Activity.”  The auditor may 
close their AWM task after the spreadsheet is provided to the attorney.  

Additional Documentation Reviewed after the 61st Day

When an attorney obtains additional documentation from a taxpayer for review, 
the auditor will be notified via an e-mail. The assignment, along with the 
additional documentation, will be routed back to the auditor to review and to 
update the schedules accordingly.  If the documentation is for a refund/credit 
transaction, invoices that are being presented for the first time should be 
added to the spreadsheet. Refund/credit transactions should be shown as, for 
example, -$5.00.  Each time an auditor reviews and updates the spreadsheet, the 
date on which it is done should be reflected in the title line “Updated On”.   
The comment on the worksheet should reflect the findings of the latest review.  
Auditors should include in the “Comments” column a brief reason for his/her 
disagreement for each transaction (i.e. no certificate presented, item taxable 
under data processing rule). 

The excel spreadsheets completed after each review will be an exhibit to every 
Tax Division pleading.  The final spreadsheet will be:  (1) an exhibit to a 
motion to dismiss, or (2) sent with the case filing to SOAH to advise the 
administrative law judge of the agreements and disagreements.  

Estimated Original Audits

When documentation is submitted for an audit that was originally estimated due 
to lack of records, attorneys will need a revised tax liability.  The 
agreed/disagreed worksheets should be used to list all items that will be 
adjusted.  

Non-uploaded Taxes (Franchise, Mixed Beverage, Hotel, Fuels, IFTA)

New supporting schedules should be submitted electronically to Legal showing 
the calculation of the revised tax liability.  These spreadsheets should 
reflect the date that they were updated in the title line.

Updated Adjustment Report 

If an attorney requests an updated Adjustment Report to show the amended tax 
amount with corresponding penalty and interest amounts, the auditor should 
contact Cynthia Salazar or Martha Middleton.  

If you have any questions regarding this memo, please contact the Area Manager 
of Technical Support, the Technical Support supervisor, or the subject matter 
experts in Audit Headquarters.

1. Hearings Spreadsheet




ACCESSION NUMBER: 201007707L
SUPERSEDED: N
DOCUMENT TYPE: L
DATE: 07/08/2010
TAX TYPE: SALES