Client:
Moorhouse Construction
Houston, Texas
Line of Business: Construction
Client Contact: Burt Moorhouse, President and Owner
Managed audit process builds case for construction firm’s $0 state tax liability
In the fall of 2007, Burt Moorhouse, president and owner of Houston-based Moorhouse Construction, learned that his firm was to be audited by the State of Texas for the second time.
The first audit had been conducted by the state, with a state auditor interfacing with Moorhouse Construction’s chief financial officer, says Moorhouse. “I didn’t have that much to do with that process, other than writing a big check at the end,” he recalls.
When the second audit came up, Moorhouse was surprised to learn about the managed audit process from Tony Rocha, manager of state and local tax at Weaver and Tidwell’s Dallas office.
“We received several calls from accounting firms, but Weaver and Tidwell’s was one of the first—and Tony got my attention when he explained the managed audit process,” says Moorhouse. “It really blew me away that you could do that. It seems like a contradiction, the state letting us hire our own auditor.”
With the managed audit process, organizations are allowed to conduct their own tax audit via a third party under the supervision of a state auditor, explains Rocha. In addition to the benefit of a managed audit eliminating the penalties and interest on any tax liability, the process also designates the third party as the company’s representative.
“Managed audits allow companies to minimize personal interaction with the state auditors, which people often find to be very stressful,” notes Rocha. “By involving an experienced third party to coordinate the audit with the state—to address liabilities, uncover overpayments, demonstrate conclusions regarding liability, provide supporting documentation and so forth—a managed audit can reduce anxiety as well as tax liability.”
Moorhouse agrees: “It was good to have Weaver and Tidwell representing us, as their tax manager knew the state’s language and could talk the talk.”
Weaver and Tidwell’s involvement in the process cut the company’s face-time with the state auditor to just two in-person meetings, says Moorhouse. “It was essentially down to email at the end, and the whole process took about three months.”
Better still, the managed audit process for Moorhouse Construction revealed an ultimate state tax liability of $0.00. “This time the only check I had to write was to Weaver and Tidwell, and it wasn’t nearly as big as the one I wrote at the end of my company’s first state audit, so it was a little less painful—and I can credit Weaver and Tidwell for that,” Moorhouse reveals.
Moorhouse has since closed his construction business. And, although he would prefer to not have to repeat the process again should he start up another company, Moorhouse says that if the state required another audit, he wouldn’t hesitate to call Weaver and Tidwell again—or to recommend the firm and the managed audit process to other businesses.
“I was very satisfied with the outcome. Weaver and Tidwell’s state tax professionals are extremely competent and knowledgeable. They spoke the state’s language and knew exactly what documentation the state was looking for,” he says. “I would never hire just any accounting firm to do what Weaver and Tidwell did, unless their associates had that specific state expertise.”