Georgia State Tax Audit Response

GEORGIA DEPARTMENT OF REVENUE — AUDIT RESPONSE PACKAGE

TABLE OF CONTENTS

1. Cover Letter
2. Authorized Representative; Communications Protocol
3. Audit Background and Scope
4. Information Document Request (IDR) Response
5. Position Statement and Legal Argument
6. Records Retention and Production Statement
7. Statute of Limitations Statement
8. Privilege and Confidentiality Reservations
9. Taxpayer Bill of Rights Invocations
10. Reservation of Rights and Defenses
11. Signature
12. Schedule of Productions and Privilege Log
13. Georgia Practice Notes
14. Sources and References

1. COVER LETTER

Date: [__/__/____]

VIA [Georgia Tax Center / Email / Certified Mail Return Receipt Requested / IRS-Designated Private Delivery Service]

TO:
[AUDITOR NAME], Tax Auditor
Georgia Department of Revenue — [Compliance Division / Audits Division]
1800 Century Boulevard, NE
Atlanta, Georgia 30345-3205

RE: Audit of [TAXPAYER LEGAL NAME]
Tax Type(s): [Individual Income / Corporate Income / Sales & Use / Withholding / Other]
Audit Period(s): [__/__/____ through __/__/____]
Audit/Case No.: [________________________________]
GA Tax Account No.: [________________________________]
FEIN/SSN: [XX-XXXXXXX]
IDR No.: [________________________________]
IDR Response Due: [__/__/____]

Dear [AUDITOR NAME]:

This letter and its enclosures constitute Taxpayer's response to the Department's Information Document Request dated [__/__/____] in connection with the captioned audit. This response is made subject to the reservations of rights and privilege stated below and without waiver of any defense, including limitations, apportionment, constitutional, or evidentiary objections.

Sincerely,

[ATTORNEY/CPA NAME]
Counsel for [TAXPAYER LEGAL NAME]

2. AUTHORIZED REPRESENTATIVE; COMMUNICATIONS PROTOCOL

2.1. Authorized Representative. Taxpayer has appointed [ATTORNEY/CPA NAME], [FIRM], [ADDRESS], [PHONE], [EMAIL], as its authorized representative pursuant to Georgia Form RD-1061 (Power of Attorney), filed with the Department on [__/__/____] and attached as Exhibit POA-1.

2.2. Direct Communications. All future communications regarding this audit (including IDRs, scheduling, and substantive correspondence) should be directed to counsel. Direct contact with the Taxpayer or its employees is respectfully declined.

2.3. Conferences. Taxpayer requests reasonable advance notice (no fewer than ten (10) business days) of any in-person conference, field visit, or examination of records.

3. AUDIT BACKGROUND AND SCOPE

3.1. Notice of Audit was issued to Taxpayer on [__/__/____] for the period(s) [__/__/____ through __/__/____].

3.2. Tax types under audit: [list].

3.3. Identified issues to date: [list issues raised by auditor or in IDRs].

3.4. Audit conferences held: [date / participants / topics].

3.5. Outstanding IDRs: [list].

3.6. Taxpayer reserves the right to require that the audit remain limited to the issues, periods, and tax types specifically identified in the Notice of Audit, consistent with O.C.G.A. § 48-1-9 and Department policy.

4. INFORMATION DOCUMENT REQUEST (IDR) RESPONSE

4.1. IDR Item-by-Item Response

4.2. Standing Objections

The following objections apply to each IDR item to the extent applicable, unless expressly waived:

• Overbreadth/Relevance. To the extent the IDR seeks materials beyond the scope of the audit periods, tax types, or issues identified.
• Privilege. Communications subject to attorney-client privilege, work product, federal tax practitioner privilege (IRC § 7525, where applicable), and Georgia accountant-client privilege under O.C.G.A. § 43-3-29.
• Confidentiality. Documents subject to confidentiality obligations to third parties, NDAs, or trade secret protection, which will be produced only under appropriate confidentiality safeguards.
• Possession, Custody, or Control. Taxpayer is not obligated to obtain documents not within its possession, custody, or control.
• Reasonableness. Pursuant to O.C.G.A. § 48-1-9 and the Taxpayer Bill of Rights, audit demands must be reasonable in time, place, and manner.

5. POSITION STATEMENT AND LEGAL ARGUMENT

5.1. Issue 1 — [Issue Heading]

5.1.1. Department's Position (as understood): [summarize].

5.1.2. Taxpayer's Position: [state position].

5.1.3. Authority: O.C.G.A. § [____]; Ga. Comp. R. & Regs. r. [____]; [case law]; [DOR Letter Ruling, Policy Bulletin, or LR-IT-####].

5.1.4. Application to Facts: [apply].

5.1.5. Conclusion: No adjustment is warranted with respect to Issue 1.

5.2. Issue 2 — [Issue Heading]

5.2.1. [Repeat structure as above.]

5.3. Issue 3 — Penalty Defenses

5.3.1. To the extent any adjustment is sustained, no penalty should be imposed under O.C.G.A. § 48-7-86 because Taxpayer (a) acted in good faith and with reasonable cause; (b) relied on the written advice of qualified tax counsel; (c) maintained adequate books and records; and (d) [other reasonable cause facts].

5.3.2. Taxpayer further qualifies for first-time penalty relief consistent with Department practice based on its prior compliance history.

6. RECORDS RETENTION AND PRODUCTION STATEMENT

6.1. Retention Policy. Taxpayer maintains tax-related books, records, and supporting documentation in accordance with O.C.G.A. § 48-2-49 (income tax limitations), § 48-8-52 (sales tax records — minimum three years), and § 48-7-82, retaining records for a minimum of [____] years following the later of the return's filing or due date.

6.2. Form of Production. Documents have been produced in the following formats:

• Native electronic files (Excel, QuickBooks export, accounting GL data) where requested;
• Searchable PDFs Bates-stamped TXP-[####] to TXP-[####];
• Sampled records consistent with the Department's stratified sampling plan, subject to Taxpayer's reservation of rights to challenge sample design and projection methodology.

6.3. Sampling Reservation. Taxpayer does not consent to any sample-based projection beyond what is expressly agreed in writing on the Department's sampling agreement form. All projections, statistical extrapolations, and assumptions remain subject to challenge on the merits.

6.4. Litigation Hold. Upon receipt of the Notice of Audit, Taxpayer implemented a litigation hold preserving electronically stored information ("ESI") and paper records relevant to the audit period.

7. STATUTE OF LIMITATIONS STATEMENT

7.1. Applicable Periods. Pursuant to O.C.G.A. § 48-2-49 and § 48-7-82, the Department may assess additional tax within three (3) years from the later of the return's due date (with extensions) or filing date. The period is extended to six (6) years where the taxpayer omitted more than 25% of gross income, and is unlimited where no return was filed or fraud is alleged.

7.2. Status of Each Period.

7.3. No Waiver. Taxpayer has not executed and does not consent to execute any limitations waiver under O.C.G.A. § 48-2-50 absent written counsel review and a clearly defined scope/expiration. Any prior waiver, if any, is described in Exhibit [____].

7.4. Federal RAR. [If applicable: A federal Revenue Agent's Report dated [__/__/____] has been issued. Taxpayer has filed / will file a Georgia amended return reporting the federal adjustments within 180 days as required by O.C.G.A. § 48-7-82(e).]

8. PRIVILEGE AND CONFIDENTIALITY RESERVATIONS

8.1. Attorney-Client Privilege and Work Product. Communications between Taxpayer and counsel, and materials prepared in anticipation of litigation, are withheld and identified on the privilege log at Exhibit PL-1.

8.2. Accountant-Client Privilege. O.C.G.A. § 43-3-29 protects certain communications with Taxpayer's CPAs. Privileged communications are likewise logged.

8.3. Confidentiality of Returns. Pursuant to O.C.G.A. § 48-2-15 and § 48-7-60, all returns and return information are confidential. Productions are made on the understanding that the Department, its officers, and employees are bound by these confidentiality provisions.

8.4. Trade Secrets and Proprietary Information. Documents containing trade secrets, customer lists, pricing models, transfer-pricing studies, or other proprietary information are stamped "CONFIDENTIAL — TRADE SECRET" and produced subject to the Department's statutory confidentiality obligations.

8.5. Inadvertent Production. Production of any privileged document is inadvertent and does not waive privilege. Taxpayer reserves the right to claw back inadvertently produced materials.

9. TAXPAYER BILL OF RIGHTS INVOCATIONS

Pursuant to the Georgia Taxpayer Bill of Rights, O.C.G.A. § 48-1-9, Taxpayer expressly invokes its rights to:

• ☐ Be treated with courtesy, consideration, and respect by Department employees;
• ☐ Conduct audit examinations at reasonable times and places;
• ☐ Receive a clear explanation of the basis of any audit activities, adjustments, and assessments;
• ☐ Receive copies of the Department's audit documents that explain the basis of any assessment;
• ☐ Confidentiality of tax return information under O.C.G.A. § 48-2-15 and § 48-7-60;
• ☐ Be represented by an attorney, CPA, or other authorized representative;
• ☐ Protest a Proposed Assessment within the statutory or notice-printed period (default 30 days under O.C.G.A. § 48-2-46; 45 days per the Taxpayer Bill of Rights and DOR practice);
• ☐ Appeal an Official Assessment to the Georgia Tax Tribunal or Superior Court within thirty (30) days; and
• ☐ Receive timely refunds with interest where required by statute.

10. RESERVATION OF RIGHTS AND DEFENSES

10.1. Nothing in this response constitutes (a) a concession of liability; (b) a waiver of any defense, including limitations, apportionment, nexus, constitutional, or evidentiary defenses; (c) a stipulation as to facts not expressly stipulated; or (d) consent to any methodology not expressly accepted in writing.

10.2. Taxpayer reserves the right to (a) supplement or amend this response; (b) raise additional issues; (c) challenge any sampling methodology, allocation, apportionment, or projection; and (d) seek refunds of any overpayment identified through the audit pursuant to O.C.G.A. § 48-2-35.

10.3. Taxpayer expressly reserves the right to protest any Proposed Assessment under O.C.G.A. § 48-2-46 and to appeal any Official Assessment to the Georgia Tax Tribunal under O.C.G.A. § 50-13A-9 or Superior Court under O.C.G.A. § 48-2-59.

11. SIGNATURE

Date: [__/__/____]

Respectfully submitted,

[LAW FIRM / CPA FIRM]

By: [________________________________]

[ATTORNEY/CPA NAME]

Georgia Bar No. [####] / CPA Lic. No. [####]

Counsel for [TAXPAYER LEGAL NAME]

[STREET ADDRESS]

[CITY, STATE ZIP]

Telephone: [NUMBER]

Email: [EMAIL]

12. SCHEDULE OF PRODUCTIONS AND PRIVILEGE LOG

12.1. Production Log

12.2. Privilege Log (Exhibit PL-1)

13. GEORGIA PRACTICE NOTES

• Document everything in writing. Every IDR, response, and substantive communication should be in writing or confirmed in a written follow-up. Verbal auditor concessions should be memorialized in the same business day.
• Statute of limitations is the first defense. Always plot the SOL grid (filing date, due date, 3-year bar, 6-year bar, fraud/no-return exceptions, RAR-trigger dates) before producing any documents. Producing records for closed years can rarely revive an SOL defense.
• Avoid the Form RD-1063 waiver trap. Do not sign an O.C.G.A. § 48-2-50 limitations extension without legal review. Where a waiver is unavoidable, narrow the scope to specific issues and shortest reasonable duration.
• Sales tax sampling. GA DOR audits typically rely on stratified statistical samples. Insist on a written sampling agreement and reserve the right to challenge methodology, projection rate, and stratification before any extrapolation is final.
• Records retention floors. O.C.G.A. § 48-8-52 (sales tax) imposes a three-year minimum, but practical retention should be six years for income tax (gross-income omission rule) and longer for fixed-asset/depreciation records.
• Federal-state coordination. A federal RAR triggers a 180-day Georgia amended-return obligation under § 48-7-82(e). Failure to file extends the SOL indefinitely as to the federal-driven adjustments.
• Confidentiality breaches. Improper disclosure of return information by Department employees is a misdemeanor under O.C.G.A. § 48-2-15. Inadvertent disclosures should be promptly addressed in writing.
• Path to Tax Tribunal. This audit response phase precedes any Notice of Proposed Assessment (administrative protest under § 48-2-46) and any Notice of Official Assessment (Tax Tribunal under § 50-13A-9 or Superior Court under § 48-2-59 within 30 days).
• Tribunal vs. Superior Court. The Tax Tribunal generally requires no bond and offers specialized tax judges; the Superior Court route under § 48-2-59 requires payment of admitted tax plus a surety bond for the disputed amount or an indigence affidavit. Choose deliberately.
• Penalty abatement records. Build the reasonable-cause record during the audit, not after. Contemporaneous tax opinions and CPA correspondence are far more persuasive than after-the-fact narratives.

14. SOURCES AND REFERENCES

• O.C.G.A. § 48-1-9 (Georgia Taxpayer Bill of Rights) — https://dor.georgia.gov/taxpayer-bill-rights
• O.C.G.A. § 48-2-7 (Examination authority) — https://law.justia.com/codes/georgia/title-48/chapter-2/
• O.C.G.A. § 48-2-15 (Confidentiality) — https://law.justia.com/codes/georgia/title-48/chapter-2/
• O.C.G.A. § 48-2-46 (Protest procedures) — https://law.justia.com/codes/georgia/title-48/chapter-2/article-2/section-48-2-46/
• O.C.G.A. § 48-2-49 (Limitations on assessment) — https://law.justia.com/codes/georgia/title-48/chapter-2/article-2/
• O.C.G.A. § 48-2-50 (Waivers extending limitations) — https://law.justia.com/codes/georgia/title-48/chapter-2/
• O.C.G.A. § 48-7-60 (Income tax confidentiality) — https://law.justia.com/codes/georgia/title-48/chapter-7/
• O.C.G.A. § 48-7-82 (Income tax SOL; RAR reporting) — https://law.justia.com/codes/georgia/title-48/chapter-7/article-4/section-48-7-82/
• O.C.G.A. § 48-8-52 (Sales tax records retention) — https://law.justia.com/codes/georgia/title-48/chapter-8/
• O.C.G.A. § 43-3-29 (Accountant-client privilege)
• Georgia DOR Audits — https://dor.georgia.gov/taxes/audits-and-collections/audits
• Statute of Limitations FAQ — https://dor.georgia.gov/statute-limitations-faq
• Form RD-1061 (Power of Attorney) — https://dor.georgia.gov/
• Form TSD-1 (Protest) — https://dor.georgia.gov/document/form/tsd-1-protest-proposed-assessment-or-refund-denial/download

Disclaimer: This template is provided for informational purposes only and does not constitute legal advice. A Georgia-licensed tax attorney or CPA must review and customize this document before any audit response is transmitted to the Georgia Department of Revenue. Audit communications can waive defenses or extend the limitations period; do not act without professional review.