Tourist Development Tax Audit Fieldwork & Assessment August 5, 2015 Scarlet Gibson Damiana Pache Melinda Medina

Objectives Exemption Test Gross Receipts Test Tourist Development Tax Audit Assessment

Exemption Test Determine if Adequate Support was Maintained as Required by State Statutes Schedule Allowed/Disallowed Exemptions Request Explanation and Additional Supporting Documentation for Disallowed Exemptions Finalize Schedule and Compute Over/Under Reported Exemption Amount for Sample Months See Exhibits I

Exemption Test Cont… If Necessary, Compute Error Ratio Based on the Results of Sample Months Extrapolate Error Ratio to Audit Period and Compute Total Over/Under Reported Exemptions for Audit Period See Exhibit II

Gross Receipts Test - Hotel Become Familiar with Night Audit Packages Locate the Following Reports Generated by Reservation System: - Daily Summary - Daily Details

Gross Receipts Test – Hotel Cont… Identify Revenue Categories that are Subject to the TDT (Room charges, resort fees, pet fees, etc.) Schedule Daily Room Revenues on Excel (Note: Keep track of all revenues posted to a miscellaneous account to review further. Also, keep track of taxes collected to ensure all taxes collected were remitted.)

Gross Receipts Test – Hotel Cont… Compare Amounts on Daily Summary to Daily Detail Reports Request Sample of Folios Trace Amounts on Folios to Daily Detail Reports

Gross Receipts Test – Hotel Cont… Compare Revenues as Posted to Reservation System to Revenues Posted to Accounting System for Each Sample Month to Include Review of: - General Ledger (GL) - Income Statements/Profit & Loss Statements Request Explanation and Supporting Documentation for Discrepancies Identified

Gross Receipts Test - Hotel Cont… Review State Sales and Use Tax Returns (DR-15s) and Compare to TDT Returns Request Explanation and Supporting Documentation for any Discrepancy

Gross Receipts Test – Hotel Cont… Finalize Schedule and Compute Over/Under Reported Gross Rental Receipts for Sample Months

Gross Receipts Test – Hotel Cont… If Necessary, Compute Error Ratio Based on Results of Sample Months Extrapolate the Error Ratio to Audit Period and Compute Over/Under Reported Gross Rental Receipts for Audit Period

Computation of Tourist Development Tax Audit Assessment Prepare Schedule Illustrating Total Under Reported Taxable Revenue Based on Results of Exemption and Gross Receipts Tests Compute Tax Audit Assessment, to Include: Tax Penalty Interest

Questions?

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