TPT audit
In short
ADOR's examination of a business's records to test whether the right tax was reported. A defined sequence, with two separate 45-day deadlines inside it.
In full
A transaction privilege tax audit is the Department's examination of a taxpayer's books, records and returns to determine whether the correct amount of tax was reported. ADOR states that businesses selected are not singled out and that an audit does not mean a business has been reporting incorrectly.
The sequence is published and it does not vary much. An auditor makes contact, an opening interview is scheduled, the Intent to Audit Letter and an appointment confirmation follow, records are examined, a transaction detail schedule is reviewed with the taxpayer, a closing conference presents draft results, and a proposed assessment issues.
Three areas are examined on every contracting audit: income, for correct amounts and classifications; exemptions and deductions, for correct amounts and documentation; and purchases, for retail or use tax paid on capital assets, supplies and articles manufactured for the taxpayer's own use. That third area is where the retail equivalent on MRRA materials is tested.
Electronic records are preferred and sampling is common. Where records are not produced, the escalation runs from a reasonable period to a supervisor, then a written request by certified mail, then a subpoena requiring departmental approval.
Two deadlines of the same length run at different points and are not the same deadline. Confusing them is expensive in opposite directions.
ADOR states its own precedence on the page: where anything on the site is inconsistent with the statutes, the Model City Tax Code or the Arizona Administrative Code, those prevail.
| Clock | Runs from | Miss it and |
|---|---|---|
| Exemption certificate cure | The auditor's request for substantiation | The transaction stays in the assessment |
| Protest | Receipt of the proposed assessment | The assessment becomes final and cannot be appealed |
A.R.S. § 42-1108; A.R.S. § 42-1125(C); ADOR TPT Audit