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Regarding sampling periods - Are there any cases that were disallowed or partially disallowed because the business is cyclic?

Full Question: Are there any cases that were disallowed or partially disallowed because the business is cyclic though out the sampling period?

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Answer:

Diane Yetter photoWhen a state conducts an audit of a taxpayer, the taxpayer should work with the auditor to select a sample that is representative. If the taxpayer has a cyclic business, this should be one of the considerations discussed with the auditor in selecting the audit sample. If this did not occur because the auditor refused to take this into account and an audit assessment was issued, it is a plausible defense to present at a hearing. If however, the taxpayer agreed to the sample or never discussed the nature of the business with the auditor, it is likely to fail. If the audit was not representative, the likely result will be additional auditing rather than a dismissal of the audit assessment in full. However, any hearing result is impossible to predict.

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