What if you were being audited by the tax collector? What if that auditor was incentivized to find every possible infraction, misstep, or minor error you may have made? What if that auditor was not paid a flat fee but was paid based on how much stuff they could uncover on you?
Impossible, you say? Maybe in Chicago but never here, you speculate?
Well, think again. Under current law, the NC Department of Revenue, the State Treasurer, cities and counties can contract with third party auditing companies on a contingency fee basis.
House Bill 462, a bill that is moving through the General Assembly, would stop this practice. Just to be clear – it would not stop audits – it would just stop the auditors from being paid on a contingency fee.
The contingency fee arrangement creates an unfair and biased assessment of taxpayers and should be prohibited. House Bill 462 does just that.
Who else thinks prohibiting state and local governments from conducting audits on a contingency basis is a good idea? The American Institute of CPAs, the Securities and Exchange Commission, the National Conference of State Legislatures, seven other state legislatures, the NC Chamber of Commerce and the North Carolina Retail Merchants’ Association.
Taxes should be fair and everyone should pay their fair share, no question. But the collection and assessment of those taxes should be fair and unbiased as well.