Louisiana – Guidance Issued Regarding Sampling and Managed Audits

SALT Report 1331 – The Louisiana Department of Revenue has issued guidance regarding Act 171, H.B. 209, which authorizes the Secretary of Revenue, or someone designated on his behalf, to enter into binding agreements to use sampling procedures as a basis for projecting audit findings.  The bulletin addresses the criteria to be considered when determining whether sampling audit methods are appropriate.

Sampling Audit Criteria

  • The taxpayer’s records are so detailed, complex, or voluminous that an audit of all detailed records would be unreasonable or impractical
  • The taxpayer’s records are inadequate or insufficient to the extent that a competent audit of the period in question is not otherwise possible, and
  • The cost to the taxpayer or the state for an audit of all detailed records would be unreasonable in relation to the benefits derived, and sampling procedures are expected to produce a reasonable result
Managed Audits
Act 171 defines and sets forth the criteria for managed audit agreements which may allow certain businesses to conduct a self-audit with guidance and verification provided by LDR employees.  The Secretary of Revenue may enter into an agreement with the taxpayer that specifies the period to be audited and the procedures to be followed. The Secretary will consider the following criteria before entering into an agreement:
  • Taxpayer’s history of compliance
  • Taxpayer’s ability to pay any expected liability
  • Time and resources taxpayer has to dedicate to the audit, and
  • The availability of the taxpayer’s records
The managed audit may be limited to certain categories of liability such as the sale of one or more types of taxable items, purchases of assets, purchases of expense items, purchases under a direct payment permit or any other category specified in the managed audit agreement.
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