This global soft drink company was founded in the late 1800's. Its products are sold in Europe, Asia, North and South America, Australia, New Zealand and South Africa. In the United States, its products are distributed by independent bottlers as well as two major beverage companies.
Previous to the current project, the soft drink company had retained Ashland five years earlier to conduct a corporate income/franchise tax review and were very pleased with the result. Ashland approached the soft drink company again, indicating that they felt they had some issues that would be worthwhile. Even though the tax department management had changed, the company’s new team saw no harm in retaining Ashland to conduct a follow-up review.
To minimize disruption to the tax department, Ashland limited its review to only three states. Ashland’s business model is to utilize the best talent in each state and bring them in from around the country to work directly with their clients face-to-face for the initial review. Ashland flew in several of their top Single State Specialists for this project to the company’s headquarters for the review.
On the first day, the team had a one-hour meeting with the Tax Director to discuss the structure of the company and any unique transactions or tax related events. They were then assigned a conference room and provided copies of returns, workpapers, and audit history documentation. There was a short meeting held at the end of each day to clarify any outstanding items, and on the fourth afternoon, Ashland presented their issues and provided a Report of Findings to the company’s tax team. It included all the issues, detailed justification and tax effect of each proposed issue. After review, the soft drink company determined which issues it wanted to pursue, and Ashland prepared the necessary documentation for submission to the states.
Ashland identified an Illinois apportionment issue worth over $200,000 that applied to tax years 2007-2008. This issue was included in their RAR filings for those years.
In New York state, Ashland was able to review tax years 2006-2011 due to an audit that was still open. Ashland identified several opportunities that increased the company’s credits that could be utilized on the returns for those periods. These issues were presented to the New York State auditor and approved. The net result of the New York issues was a tax reduction of approximately $1,700,000.