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Business Personal Property Auditing Representation

In 2014, a major North Carolina jurisdiction initiated a five year audit of our client's hotel's business personal property, covering tax years 2010 thru 2014. The audit was conducted by a private sector contractor engaged by the County.

The Auditor requested accounting records for not only the years of the audit but for prior years, 2005 thru 2009, back to the first year of our client's ownership of the hotel. We gathered together multiple years fixed asset records for the hotel and sent them to the auditor.

Following several months of review by the auditor and multiple requests from them for clarifications and additional documents, they provided their audit findings to the Assessor who forwarded the findings to us.

The initial findings consisted in part of an excel workbook containing many pages of detailed individual real and personal property costs spanning ten years. Our analyst reviewed and classified each and every line item cost. This review revealed, among other things, that the auditor had misclassified real property costs as personal property. This raised the question of the possibility that some property had been taxed as both real and personal property. Our conversations with the Real Property Division of the Assessor's office as well as the State Department of Revenue supported our opinion that many of the assets the auditor had classified as personal property should have been classified as real property. Further , many of these real property assets had already been assessed and taxed by the Assessor's Real Property Division.

Once the audit findings were secured, we then filed a formal appeal to the County Appeals Board seeking a waiver of the +/- $44,000 in penalties. This appeal was successful and all penalties were waived.

The final outcome of our contesting the Auditor's Initial Findings is as follows:

Savings to the hotel will continue to accrue in future years as a result of our challenge of the audit findings.

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