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Contingent Fee Audits
POSITION: State and local auditors and audit advisors should
not be paid on a contingency fee basis in any form.
EXPLANATION: NCCBI supports tax and other audits by
governmental entities. Approximately 27 North Carolina counties have
performed property tax audits of their taxpayers using outside
auditing firms being paid as much as 35% of the additional taxes
assessed as a result of their audits. Specifically, these auditors are
paid fees based on the amount of additional taxes generated by their
audits.
On December 3, 1993, the North Carolina Supreme Court held that
contingent fee property tax audits are permissible in North Carolina.
The rationale of the Court was that the Court could not make the
public policy concerning these audits. Instead, the Court said that
the Legislature of North Carolina should determine whether permitting
a property tax audit with the auditor's being paid a percentage of the
additional taxes generated by the audit is acceptable under the public
policy of North Carolina.
Permitting audits of taxpayers with another private citizen being
paid a percentage of the additional taxes or amount generated by the
audit services is contrary to the public good. Such audits create a
hostile taxing environment and a sense of unfairness among taxpayers.
North Carolina's Supreme Court decision allowing contingent fee
audits has received national attention and has sent a message to
businesses that the State's taxing system is hostile to business.
Outlawing contingent fee audits will still permit audits of taxpayers,
but will indicate North Carolina's desire to treat all taxpayers
fairly.
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Continue N.C.
Budget Reform
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Defining
"Doing Business" In North Carolina
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Property Tax
Exemptions For Construction In Progress And Product Samples
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Machinery Tax
And Sales Tax
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Change The Net
Economic Loss (Nel) Carryover
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Remove Credit
Balances From The Definition Of Unclaimed Property
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Remove
Inventories From Franchise Tax Base
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Sales Tax
Discount
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Single Sales
Factor
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Proposed Model
Unclaimed Property Act
Allow an R&D
Credit for the Actual Amount of N.C. Expenditure
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