Ronald J. Cappuccio, J.D., LL.M.(Tax)
Counsellor at Law
1800 Chapel Avenue West
Cherry Hill, New Jersey 08002 USA
Fax (856) 665-9005
New Jersey Division of Taxation Targets Bars and Restaurants for Comprehensive Audits
Liquor License Holders Targeted
The New Jersey Division of Taxation is on the attack again!
Fifty (50) new employees have been hired to audit bars and restaurants
with liquor licenses to extract more taxes from the business and their
The Division of Taxation tries to take advantage of the typically
poor record-keeping of many small businesses. Their abusive method is to grossly exaggerate the income of the business
during the audit. This causes an increase in:
for the business and its owners!
- Sales Tax
- Corporate Income Tax, and
- Gross Income Tax
Not a Simple Audit
The Audit process starts with a Notice from the Division
of Taxation scheduling an audit. Unlike a normal audit where there is an attempt to find the correct income and deductions, this audit
is designed to "prove" that the business is understating income.
Using elevated profit percentages, the auditor greatly inflates gross income
resulting in a large tax increase. When penalties and interest are
added, the result could cost an unprepared taxpayer a small fortune possibly forcing the sale of the business.
How Should You Respond?
Although some business owners mistakenly believe that "cooperation"
by not being represented will make the business look better, that is Not
Do not call or contact the Division of Taxation
- Do not let the audit start without Legal Representation.
Engage a tax attorney, in addition to your accountant to
represent you during the audit process.
Defer all of the Auditor's questions to your tax attorney
Gather your accounting records and all tax returns for the
years being audited.
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