This global company is one of the top four largest food and beverage companies in North America and one of the largest in the world. With over 25 well-known brands, this company has annual revenues of over $25 billion and employs in excess of 35,000 employees.
The food and beverage company agreed to allow Ashland to come in and review their returns after Ashland had spent some time cultivating the relationship. Because of the lengthy procurement and legal process, the company was reluctant to commit to do projects without a high level of confidence that the effort would be worthwhile. However, in this case, after hearing of Ashland’s reputation, they agreed to take the chance. The company had two primary filing groups for Ashland to review.
As is the case for most Ashland projects, Ashland worked with the food and beverage company to narrow the scope of the review down to only four states in an effort to make it as efficient as possible. We conducted a four-day on-site review at the company’s headquarters. In this time, the team examined the previously filed tax returns, apportionment papers, workpapers, and audit schedules. At the request of the client, we focused most of our attention on Illinois. We reviewed the first entity for the period 2013-2015 and the second entity for 2013 – 2016.
During the initial review, we identified an Illinois Sales Factor adjustment issue for the first entity. Because they were under audit that year, Ashland and the company agreed that the issue should be presented to the auditor. After working with Ashland to document the issue, the company’s audit team presented the issue to the Illinois field auditor and it was approved. The result of this issue was a refund of slightly more than $1,000,000. This was subsequently received by the company.
In addition, the Ashland team identified an issue worth approximately $1,300,000 for the second entity for the tax years 2013 – 2016. Ashland’s Illinois consultant team, made up of former Senior Auditors from the State of Illinois with 30 years or more tenure each, was able to identify an entity that could be excluded from the Illinois filing group. The removal of that entity reduced the Illinois taxable income, which reduced the Illinois tax that was due for the filing periods. Amended returns were prepared by Ashland, approved by the company and then filed with the state. This refund request has been assigned to an Illinois auditor for review and all indications are that this refund will be approved shortly.