The immediate need was to identify the company's current income so that year-end tax planning could be performed. Unfortunately, the financial statements required substantial adjustments. The accrual basis taxpayer kept its books on a de facto cash basis. Capital transactions had been expensed, and depreciation had not been booked. Interest income was unknown because it lay in an off-balance sheet account. With the clock ticking, the only solution was to send in Miller Grossbard's rapid response team.

After grappling with the unknown for two weeks, the financial statements fairly represented the taxable income for the year. With only four days left to devise and to implement a year-end tax plan, calls went out to the owner and his attorney. The recommended transactions were explained, and the necessary documentation was completed. Potential interest and penalties were averted, and taxes were deferred.

The sales tax audit was similarly difficult. It had been underway for almost a year. The previous CPA had resigned. The state auditor was losing patience and had issued a deficiency letter. The manufacturing company, not knowing what to do, deposited thirty boxes of various records at the door of Miller Grossbard. Realizing that another challenge was before our firm, Miller Grossbard's rapid response team acted again.

Boxes were inventoried to identify relevant information. Forty-two months of individual sales invoices were reviewed to determine those requiring exemption certificates. With the fax machine humming for three days, many missing certificates were received. Records were organized for the state auditor and presented for the state's review. With the aid of a capable sales tax attorney, the six-figure tax deficiency was reduced to less than $10,000. Another tax problem had been averted.

The associate claiming to be an employee presented the usual risk of IRS assessments for unpaid social security, Medicare, and unemployment taxes, as well as failure to withhold income, social security, and Medicare taxes. The issue required an investigation of the facts and the drafting of a response to the IRS inquiry. The answer from the Service was unexpected. The Service, as allowed by law, declined to become involved in the dispute. The third issue was closed.

Since this engagement, Miller Grossbard has assisted in a reorganization, substantially reducing the state and federal tax burden. We have developed operating budgets and advised on the upgrading of accounting software and the local area network.