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How a Reverse Audit Recouped $1M for a Manufacturer

Cookie-Factory-Line_GI-842906390-MD.jpgCan reverse audits really result in significant refunds for manufacturers?  Here’s an example of a reverse audit that uncovered more than $1 million in overpaid sales and use taxes for one manufacturer. Is money waiting to be recovered at your company?

While refunds are not guaranteed, reverse audits are good tools to identify and recover overpaid sales or use taxes.  Our sales and use tax team completes numerous reverse audits for manufacturers each year.  They work with several states to request refunds and challenge denials.

Recently, we challenged a decision made by the Alabama Department of Revenue and won an exemption for certain chemicals used by food processors. The team knew that this decision would benefit a specific multi-state food processor with several plants in Alabama.

Motivated by the chemical exemption decision, this food processor retained our team to conduct a reverse audit for their Alabama facilities.

The result…we identified and filed refund requests of more than $1 million on behalf of the manufacturer.

Six Questions Every Manufacturer Should Ask See the Questions Now.A portion of these refunds came by qualifying for the chemical exemption which we brought to the table. But the reverse audit also found a variety of additional overpaid sales and use tax for:

  • Production supplies
  • Real property contractors
  • Manufacturing machinery
  • Repair parts for manufacturing machinery

Our team is working with the Alabama DOR and vendors, on behalf of the manufacturer, to recoup most of these overpaid tax dollars. 

Most importantly, our sales tax experts conducted sales and use tax training seminars for the purchasers, AP staff and other key employees at each of the manufacturer’s Alabama facilities.  We reviewed the specific overpayment issues and provided employees with practical tools and state-specific advice to take full advantage of the tax breaks available in Alabama.

A reverse audit is a good tool to identify and recoup overpaid sales and use taxes.  When teamed with training, it will help employees avoid overpayments in the future.

To learn more about our reverse audit process, visit our website

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Lauren Stinson, CMI
Written by Lauren Stinson, CMI
As a Principal with Cherry Bekaert, Lauren serves as the National Leader for the Sales & Use Tax practice within the Firm’s State & Local Tax group. Based in Cherry Bekaert’s Atlanta practice, Lauren is an expert on sales and use tax issues that directly impact manufacturers, technology businesses and eCommerce sellers on the state and national levels.

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