This leading apparel retail company owns some of the most well-known clothing brands in the world. They have revenues of over $15 billion, employ over 135,000 employees, and have over 3,000 stores from which they market their apparel lines.
The retail company felt they were in good shape as far as state taxes were concerned because they worked closely with several of the Big Four firms in the state tax area. However, they did not see any harm in bringing in a highly-qualified state tax specialty group to review their returns to make sure they were not overlooking anything.
In an effort to conduct the most efficient review, Ashland focused most of the review effort in a couple of states, one of which was New York State. At the time of Ashland’s review, the retail company had an ongoing New York State audit underway for the years 2006 – 2010. Ashland reviewed the years covered by the audit in an attempt to identify any offsets or refunds available. Ashland’s review team included a former New York State senior level Audit Supervisor who had spent over 12 years with the state of New York and had a solid working knowledge of what the state would allow. We conducted a review of the returns and work papers over four days. At the end of the review, the Ashland team presented the Report of Findings to the retail company. This report listed the issues individually, the legal justification for each one, and the expected tax benefit of each one listed.
Ashland identified a little-known New York State credit that was able to be claimed in the years prior to the years being audited. Now, the company will be able to carry this forward into the open years. Ashland worked with the company’s tax team to fully document the credit, and the company presented it to the New York State auditor prior to the finalization of the audit. The auditor approved the credit issue, which resulted in a tax reduction of approximately $6,500,000. Without the Ashland review, the statute would have lapsed and retail company would have forfeited this tax saving.