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June 17, 2016

Resolution of New York Assessment Saves Manufacturer $2.7 million

Client Profile

Industry: Manufacturing
Annual Revenue: >$500 million
Entity Structure: Consolidated Group
Geographic Footprint: National
Ownership Structure: Public

CBIZ helped a manufacturer save $2.7 million in tax assessments.Issue

A large manufacturer filed a combined corporate income tax return for its 100 legal entities in New York. A state audit removed approximately 95 of the entities, all of which operated at a loss, on the basis that they should not be included in a combined filing. As a result, the manufacturer faced $2.7 million in additional taxes.

Solution

With the help of our national state and local tax controversy group, the taxpayer protested the assessment. Our team provided documentation that demonstrated the unitary nature of the entities and supported the entities’ proper inclusion in the original combined filing.

We took a deep dive into the company, interviewing key personnel and sifting through volumes of information. Among other evidence, the interrelated nature of the corporate entities was proven by the manufacturer’s unified approach across corporate lines to solicit and secure new business. Additionally, alternative computations established a substantial level of intercorporate transactions.

Outcome

The examples uncovered helped to eliminate the $2.7 million assessment. We also assisted in securing the release of the manufacturer’s previously suspended tax benefits, which were valued at more than $1 million.

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Copyright © 2016, CBIZ, Inc. All rights reserved. Contents of this publication may not be reproduced without the express written consent of CBIZ. This publication is distributed with the understanding that CBIZ is not rendering legal, accounting or other professional advice. The reader is advised to contact a tax professional prior to taking any action based upon this information. CBIZ assumes no liability whatsoever in connection with the use of this information and assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect the information contained herein.

CBIZ MHM is the brand name for CBIZ MHM, LLC, a national professional services company providing tax, financial advisory and consulting services to individuals, tax-exempt organizations and a wide range of publicly-traded and privately-held companies. CBIZ MHM, LLC is a fully owned subsidiary of CBIZ, Inc. (NYSE: CBZ).

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