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Hi- I just received notification that my business is being

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Hi- I just received notification that my business is being audited for franchise/excise tax. Can you please explain to me what that is? Is it as detailed as a sales tax audit?
Welcome. Thank you for choosing us to assist you. My name is XXXXX XXXXX my goal is to help make YOUR life, a little...LESS taxing.

Q: Can you please explain to me what that is?

A: Franchise and excise taxes are privilege taxes imposed on each corporation, limited partnership, limited liability company and business trust chartered/organized in Tennessee or doing business in this state.

 

Due Dates:


Annual - 15th day of the 4th month following the close of your books and records.
Quarterly estimated payments - 15th day of the fourth, sixth, and ninth months of the current tax year and the 15th day of the first month of the next succeeding tax year.


Extension - 6-month extension upon request


Tax Rates:


Franchise tax - .25% of the greater of net worth or real and tangible property in Tennessee. The minimum tax is $100.


Excise tax - 6.5% of Tennessee taxable income

 

REFERENCE SOURCE:

 

http://www.tn.gov/revenue/tntaxes/fae.shtml

 

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Q: Is it as detailed as a sales tax audit?

 

A: I would say that this audit would not be as detailed as a sales audit. Though in a different state, I've dealt with a sales tax audit before and that is quite tedious. Based on the type of tax that is involved in your case, I would venture to say that no this type of audit will not be as detailed or tedious as a sales tax audit.

 

Please let me know if I can be of further assistance to you regarding this matter.

 

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Customer: replied 3 years ago.


Thank you. What type of documentation do you think they would want to see for this and how long would this type of Audit take? I am having my CPA represent me, but because tax extensions are due this week, he has not had a lot of time to spend with me regarding it.

Hello again, you are welcome.

Q; What type of documentation do you think they would want to see for this and how long would this type of Audit take?

A: For the Franchise tax portion of the audit, there really should be no documentation needed, as this is tax that you pay for the privilege of being able to have a corporation in the state. As for the Excise tax, they will likely ask to see income documents, (client invoices, accounts receivables, bank statements, things of that nature). As for how long this audit will take, I would only be taking a wild guess, therefore I can't really say for certain. I would say at the very least 2-4 weeks. If your CPA doesn't have time to deal with the matter now, he/she can possibly request that the audit be postponed. In most cases taxing agencies will grant a postponement if there is reasonable cause. Reasonable cause in this case is the fact that extension deadline dates are rolling around and your CPA simple can't deal with the matter right now.
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