State Tax Audit Response (NH DRA)

RESPONSE TO DRA AUDIT — NEW HAMPSHIRE DEPARTMENT OF REVENUE ADMINISTRATION

TABLE OF CONTENTS

1. Cover Letter to DRA Audit Division
2. Audit Engagement Acknowledgment and Designation of Representative
3. Response to Information Document Request
4. Position Statement and Legal Argument
5. Assertion of Taxpayer Bill of Rights
6. Confidentiality Designation
7. Reservation of Appeal Rights
8. Verification
9. Schedule A — IDR Response Index
10. Schedule B — Records Retention Log
11. New Hampshire Practice Notes
12. Sources and References

1. COVER LETTER TO DRA AUDIT DIVISION

[DATE]

NH Department of Revenue Administration
Audit Division
109 Pleasant Street
PO Box 457
Concord, NH 03302-0457

Attn: [AUDITOR NAME], [TITLE]

Re: [TAXPAYER NAME] — Audit of [TAX TYPE] for Tax Period(s) [YEAR(S)]
DRA Account / Taxpayer ID: [________________________________]
Audit Reference No.: [________________________________]

CONFIDENTIAL — PROTECTED UNDER RSA 21-J:14

Dear [AUDITOR NAME]:

This letter, together with the attached responses and exhibits, constitutes [TAXPAYER NAME]'s ("Taxpayer") response to the [engagement letter / Information Document Request No. ___ / Notice of Proposed Adjustment] dated [DATE] in the above-referenced audit.

Taxpayer is committed to full and timely cooperation with the Department's audit and submits the enclosed materials in accordance with applicable New Hampshire law. Taxpayer respectfully reserves all rights set forth herein.

2. AUDIT ENGAGEMENT ACKNOWLEDGMENT AND DESIGNATION OF REPRESENTATIVE

2.1. Acknowledgment. Taxpayer acknowledges receipt of the Department's audit engagement letter dated [DATE] opening an examination of [TAX TYPE] for the tax period(s) [YEAR(S)].

2.2. Designated Representative / Power of Attorney. Pursuant to RSA 21-J:14, II and N.H. Code Admin. Rules Rev 207, Taxpayer designates the following as its authorized representative(s), and a duly executed Form DP-2848 (Power of Attorney) is enclosed:

2.3. Communications. All audit communications should be directed to the designated representative at the address above. Taxpayer requests that no communications occur with operational personnel without prior notice to counsel.

2.4. Records Custodian. Taxpayer designates [NAME, TITLE] as records custodian for purposes of this audit and will produce [NAME] for any records-authentication declaration the Department reasonably requires.

2.5. Audit Scope. Based on the Department's engagement letter, Taxpayer understands the audit scope to be: [DESCRIBE SCOPE — tax types, periods, and issues]. If the Department intends to expand scope, Taxpayer requests written notice.

3. RESPONSE TO INFORMATION DOCUMENT REQUEST

3.1. IDR Identification. This Section responds to Information Document Request No. [____] dated [DATE], which requested the items listed in Schedule A.

3.2. Production Format. Documents are produced [in PDF via the GTC secure portal / on encrypted USB / in hard copy]. Bates numbering: [PREFIX]-000001 through [PREFIX]-______.

3.3. Item-by-Item Response. A complete index of items produced, items withheld, and items not in Taxpayer's possession is set forth in Schedule A. Specific responses follow:

3.4. Objections and Privileges Asserted.

(a) Attorney-client privilege. Documents listed on the privilege log (Schedule C) reflect confidential communications between Taxpayer and counsel for the purpose of obtaining or rendering legal advice and are withheld from production on that basis.

(b) Work-product doctrine. Documents prepared in anticipation of litigation by counsel or at counsel's direction are likewise withheld.

(c) Federal tax confidentiality. Federal tax returns and return information are produced subject to the limitations of IRC § 6103 and RSA 21-J:14.

(d) Overbreadth / lack of relevance. To the extent any IDR item exceeds the scope of the audit as set forth in the engagement letter, Taxpayer objects on grounds of relevance and undue burden under N.H. Code Admin. Rules Rev 200.

3.5. Reservation. Taxpayer reserves the right to supplement, amend, or correct this response as additional information becomes available. Production hereunder shall not be deemed a waiver of any privilege, objection, or substantive position.

4. POSITION STATEMENT AND LEGAL ARGUMENT

4.1. Summary of Position. Taxpayer's returns for the audit periods are correct as filed. The proposed adjustments contemplated by the Department are unsupported by New Hampshire law and the audit record for the reasons set forth below.

4.2. Issue 1 — [Issue Heading].

(a) Facts. [FACTUAL BACKGROUND]

(b) Applicable law. [STATUTE / RULE / CASE]

(c) Analysis. [LEGAL ANALYSIS]

(d) Conclusion. The proposed adjustment of $[____] should be withdrawn.

4.3. Issue 2 — [Issue Heading].

(a) Facts. [FACTUAL BACKGROUND]

(b) Applicable law. [STATUTE / RULE / CASE]

(c) Analysis. [LEGAL ANALYSIS]

(d) Conclusion. The proposed adjustment of $[____] should be withdrawn.

4.4. Penalties. No penalty under RSA 21-J:33 is warranted because Taxpayer's positions were taken in good faith and supported by substantial authority. Penalties should be abated under RSA 21-J:42 to the extent based on prior written advice from the Department.

4.5. Request for Pre-Assessment Conference. Pursuant to RSA 21-J:3 and N.H. Code Admin. Rules Rev 200, Taxpayer requests a pre-assessment conference with the assigned auditor and the Audit Division supervisor before any Notice of Proposed Adjustment is finalized.

5. ASSERTION OF TAXPAYER BILL OF RIGHTS

Taxpayer asserts the following statutory rights under the New Hampshire Taxpayer Bill of Rights (RSA 21-J:40 through 21-J:44):

5.1. RSA 21-J:40 — Information statements. Taxpayer requests that the Department provide a clear written statement of (a) the procedures and remedies available, (b) the basis of any proposed adjustment, and (c) the consequences of nonpayment, before issuing any Notice of Assessment.

5.2. RSA 21-J:41 — Communications. Taxpayer requests that all audit communications be directed to designated counsel and that any contact with employees, customers, or vendors be coordinated with counsel.

5.3. RSA 21-J:42 — Abatement of penalty for erroneous written advice. To the extent any position taken on Taxpayer's returns rested on written advice from the Department, Taxpayer requests abatement of any related penalty. Documentation of such reliance is enclosed at [EXHIBIT __].

5.4. RSA 21-J:43 — Installment payment agreement. If any liability is ultimately determined to be due, Taxpayer requests consideration of a written installment payment agreement.

5.5. RSA 21-J:44 — Remedy for noncompliance. Taxpayer reserves all rights under RSA 21-J:44 in the event of any departmental failure to comply with the Bill of Rights.

6. CONFIDENTIALITY DESIGNATION

6.1. All materials transmitted herewith are confidential and privileged tax records protected under RSA 21-J:14. The Department, its employees, and contractors are prohibited from disclosing such records except as expressly authorized by statute.

6.2. Taxpayer requests that all responses be maintained in the audit file under appropriate confidentiality controls and that any inter-agency or third-party sharing be limited to that authorized by RSA 21-J:14, II–IV.

6.3. To the extent the materials include federal tax return information protected under IRC § 6103, the Department's use is further limited by its disclosure agreement with the Internal Revenue Service.

7. RESERVATION OF APPEAL RIGHTS

7.1. Petition for Redetermination — 60 days. Taxpayer reserves the right, in the event of an adverse Notice of Assessment, to file a Petition for Redetermination with the DRA Hearings Bureau within sixty (60) days of the notice date pursuant to RSA 21-J:28-b, I.

7.2. Appeal to BTLA or Superior Court — 30 days. Taxpayer further reserves the right to appeal any adverse Hearings Bureau decision to the New Hampshire Board of Tax and Land Appeals or to the Superior Court of the county in which Taxpayer resides or has a place of business within thirty (30) days of the decision pursuant to RSA 21-J:28-b, IV.

7.3. Appeal to NH Supreme Court. From a final BTLA decision, an appeal lies directly to the New Hampshire Supreme Court under RSA 541; from a final Superior Court judgment, under N.H. R. Sup. Ct. 7.

7.4. No waiver. Nothing in this audit response constitutes a waiver of any procedural or substantive right, including the right to challenge the constitutionality of any tax or assessment.

8. VERIFICATION

STATE OF [_______________]

COUNTY OF [_______________]

I, [NAME], being duly sworn, depose and say that I am the [OFFICER TITLE] of Taxpayer; that I have authority to execute this audit response on its behalf; that I have read the foregoing response and reviewed the attached exhibits; and that the factual statements herein are true and correct to the best of my knowledge, information, and belief.

[________________________________]

[NAME, TITLE]

Sworn to and subscribed before me this [____] day of [_______________], 20[____].

[________________________________]

Notary Public / Justice of the Peace

(My Commission Expires: [_______________])

9. SCHEDULE A — IDR RESPONSE INDEX

10. SCHEDULE B — RECORDS RETENTION LOG

11. NEW HAMPSHIRE PRACTICE NOTES

• DRA structure. The DRA Audit Division performs substantive examinations; the Hearings Bureau adjudicates timely petitions for redetermination; the Collections Division enforces final liabilities. Each operates under N.H. Code Admin. Rules Rev 200 and RSA 541-A.
• Statute of limitations on assessment. Generally three years from the later of the return due date or the date filed; six years where the return omits more than 25% of properly reportable amounts; unlimited where no return was filed or fraud is alleged. RSA 21-J:29.
• No general state income or sales tax. Business audits center on BPT (RSA 77-A; 7.5%), BET (RSA 77-E; 0.55%), and M&R (RSA 78-A; 8.5%), plus narrower taxes (Communications Services 7%; Real Estate Transfer; Tobacco; Utility Property). The Interest & Dividends Tax was fully repealed effective January 1, 2025; periods ending 12/31/2024 and earlier remain auditable within the limitations period.
• Recordkeeping is statute-specific. Recordkeeping duties are imposed by the operative chapter (e.g., RSA 77-A:8 for BPT, RSA 78-A:18 for M&R) — not by RSA 21-J:13 (which is the rulemaking authority section). Cite the correct provision when responding.
• Confidentiality. RSA 21-J:14 makes DRA records confidential and privileged. Mark all submissions accordingly. Sharing with the Internal Revenue Service is governed by a federal disclosure agreement.
• Pre-assessment conferences are available and underused. Requesting a conference with the auditor's supervisor before assessment can resolve issues without invoking Hearings Bureau jurisdiction.
• Watch the 60-day clock once an assessment issues. A petition for redetermination must be received by the Hearings Bureau within 60 days of the Notice of Assessment date (RSA 21-J:28-b, I); the deadline is jurisdictional and is not extended by ongoing informal correspondence.
• Form DP-2848 (Power of Attorney). File contemporaneously to ensure all DRA communications flow to counsel.

12. SOURCES AND REFERENCES

• RSA 21-J (Department of Revenue Administration) — https://gc.nh.gov/rsa/html/I/21-J/21-J-mrg.htm
• RSA 21-J:14 (Confidentiality of Department Records) — https://gc.nh.gov/rsa/html/I/21-J/21-J-14.htm
• RSA 21-J:28-b (Petition for Redetermination) — https://gc.nh.gov/rsa/html/I/21-J/21-J-28-b.htm
• RSA 21-J:33 (Penalties) — https://gc.nh.gov/rsa/html/I/21-J/21-J-33.htm
• RSA 21-J:40–44 (Taxpayer Bill of Rights) — https://gc.nh.gov/rsa/html/I/21-J/21-J-mrg.htm
• RSA 77-A (BPT) — https://gc.nh.gov/rsa/html/V/77-A/77-A-mrg.htm
• RSA 77-E (BET) — https://gc.nh.gov/rsa/html/V/77-E/77-E-mrg.htm
• RSA 78-A (Meals & Rooms / Rentals) — https://gc.nh.gov/rsa/html/V/78-A/78-A-mrg.htm
• RSA 82-A (Communications Services Tax) — https://gc.nh.gov/rsa/html/V/82-A/82-A-mrg.htm
• NH DRA Audit Division — https://www.revenue.nh.gov/about-dra/audit-division
• NH DRA Audit of Return or Document and Assessments — https://www.revenue.nh.gov/about-dra/audit-division/audit-return-or-document-and-assessments
• NH Taxpayer Bill of Rights — https://www.revenue.nh.gov/resource-center/taxpayer-assistance/taxpayer-bill-rights
• NH DRA Hearings Bureau FAQ — https://www.revenue.nh.gov/faq/hearings.htm
• NH DRA Laws & Rules — https://www.revenue.nh.gov/resource-center/laws-rules
• NH Code Admin. Rules Rev 200 (Practice and Procedure) — https://gc.nh.gov/rules/state_agencies/rev200.html

Disclaimer: This template is provided for informational purposes only and does not constitute legal advice. New Hampshire imposes no general personal income tax and no general sales tax; the Interest & Dividends Tax was repealed effective January 1, 2025. An attorney licensed in New Hampshire must review and customize this response. Audit deadlines and preservation duties are strict; verify all citations at gencourt.state.nh.us and revenue.nh.gov before transmission.