Printable Version

Back to Case Study Home

Incumbent Firm’s Oversight Creates Significant Tax Refund Opportunity for CB&H

Scenario

This CB&H State and Local Tax (SALT) client is a middle market company that operates as a wholesaler of seafood products. The company utilized the services of a Big Four firm for its assurance and tax needs. However, a former employee of the incumbent firm continued a relationship with the client’s financial accounting personnel after joining CB&H as a partner. The client had recently hired a new CFO who was seeking clarification on a tax position recommended by the incumbent firm involving local license fees. The incumbent, several years back, recommended that the client accrue for a perceived exposure item based on the firm’s interpretation of the law. The accrual was in the six figures and growing, which prompted the new CFO to seek out a clear understanding of the facts and circumstances surrounding the position. The CFO contacted the incumbent firm and the CB&H partner for advice. The CB&H partner immediately referred the CFO to the firm’s SALT group. CB&H was the first firm to respond and further explore the issue with the prior recommendation from the incumbent firm.

CB&H Action Steps

During the initial meeting, the primary goal was not to secure a large engagement, but to learn more about the client’s business in order to make a determination about what CB&H could offer to the client and to gain clarification about the CFO’s issues. The SALT group asked probing questions surrounding the day-to-day operations of the business, product flows and other fact driven considerations. Based on these facts, the SALT group realized that the opportunity for the client was more than figuring out whether or not the client had incorrectly accrued for the exposure, but whether or not the client was even subject to the local license fee. The SALT group had uncovered an opportunity to recover a significant amount of money for this company. CB&H presented our services in a manner that would be a win/win situation for both parties. The CB&H partner and SALT professionals negotiated an equitable deal to conduct the refund analysis for a fee that represented value to the company. Over the next six months, the CB&H SALT group worked diligently to secure the refunds associated with the overpayment.

Results

The client received approximately $1,000,000 in refunds and other financial benefits related to this project. Through the team effort of the SALT group and a local partner, CB&H was able to solve an issue for the client and save it substantial tax dollars. Subsequent to this engagement, the CB&H SALT group has been engaged to assist with other SALT projects and serves this client as its preferred SALT service provider. In addition, we have been considered for future projects in the assurance and tax services area.