The Voice of Business, Industry & the Professions Since 1942
North Carolina's largest business group proudly serves as the state chamber of commerce

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
Defining "Doing Business" In North Carolina
Property Tax Exemptions For Construction In Progress And Product Samples
Machinery Tax And Sales Tax
Change The Net Economic Loss (Nel) Carryover
Remove Credit Balances From The Definition Of Unclaimed Property
Remove Inventories From Franchise Tax Base
Sales Tax Discount
Single Sales Factor
Proposed Model Unclaimed Property Act
Allow an R&D Credit for the Actual Amount of N.C. Expenditure
 

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