benefits
BDO's SOLUTION
The challenge
Company Background
A company that manufactures construction units for specialized industries has a unique business model that complicates how taxes are assessed.
Innovative Tax Strategy Leads to Nearly 90% Tax Bill Reduction
Significant Assessment Reduction
One state’s preliminary six-figure assessment was reduced by over 65%.
background
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Company Background
A biotechnology company was preparing to file a marketing application for a patient-specific cell therapy product and needed to demonstrate their manufacturing process was robust and reproducible
before filing.
Future Planning Yields Results
The refund for subsequent years based on findings in the first state audit more than paid for the assessment and our fees.
Even Larger Assessment Reduction
BDO presented a successful argument in the second state based on sourcing the sale and reduced the proposed tax assessment by
nearly 90%.
Sales & Use Tax Client Success Story
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A New Approach
Working with company leadership and management, BDO broke down the transaction’s contractual terms and walked the second state auditor through what was built and how, and the contract terms supporting the tax positions.
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Tax Refund Application
BDO also applied for a tax refund for subsequent years based on findings in the audit.
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Perseverance With the State
Typical transaction defense techniques for construction services would not work, so BDO adopted a rarely used argument that relied upon sales tax reciprocity agreements between states. The two states had reciprocity, with one state’s 10% tax greater than the other state’s 7%, so no tax was due.
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Expectations Exceeded
The audit defense work BDO performed exceeded the expectations of the company, who can now rely on BDO for all their sales tax work.
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Audits From Multiple States
During the initial state audit, the company received an additional notice of an audit from another state, which had different tax interpretations.
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Nontraditional Business Model
The company’s business model differs from the traditional construction model, in which the general contractor buys materials and subcontracts the installation work. Instead, this company manufactures fully functional units in one state while conducting on-site supervision of contractors who assemble the building in another state.
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Seasoned Tax Advisor Needed
Having received a state sales tax audit notice, the company needed a tax advisor that understood the complexities of applicable state tax rules, which were written with traditional builders in mind, to be able to differentiate the company’s unique business model.
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Result 3
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Result 2
Minimum 200 Characters - Maximum 290 Characters
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Result 1
Minimum 200 Characters - Maximum 290 Characters
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RESULTS
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Audits From Multiple States
During the initial state audit, the company received an additional notice of an audit from another state, which had different tax interpretations.
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Nontraditional Business Model
The company’s business model differs from the traditional construction model, in which the general contractor buys materials and subcontracts the installation work. Instead, this company manufactures fully functional units in one state while conducting on-site supervision of contractors who assemble the building in another state.
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Seasoned Tax Advisor Needed
Having received a state sales tax audit notice, the company needed a tax advisor that understood the complexities of applicable state tax rules, which were written with traditional builders in mind, to be able to differentiate the company’s unique
business model.
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CHALLENGE
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Audits From Multiple States
During the initial state audit, the company received an additional notice of an audit from another state, which had different tax interpretations.
Nontraditional Business Model
The company’s business model differs from the traditional construction model, in which the general contractor buys materials and subcontracts the installation work. Instead, this company manufactures fully functional units in one state while conducting on-site supervision of contractors who assemble the building in another state.
Seasoned Tax Advisor Needed
Having received a state sales tax audit notice, the company needed a tax advisor that understood the complexities of applicable state tax rules, which were written with traditional builders in mind, to be able to differentiate the company’s unique
business model.
CHALLENGE
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Audits From Multiple States
During the initial state audit, the company received an additional notice of an audit from another state, which had different tax interpretations.
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