West Virginia State Tax Audit Response and IDR Response Package

WEST VIRGINIA STATE TAX AUDIT RESPONSE PACKAGE

TABLE OF CONTENTS

1. Preliminary Engagement Letter and Power of Attorney
2. Audit Engagement Acknowledgment to Tax Division
3. Information Document Request (IDR) Response Cover Letter
4. Position Statement on Proposed Adjustments
5. Records Retention and Privilege Log Template
6. Closing Conference Request
7. Reservation of Rights and Statute of Limitations Preservation
8. West Virginia Practice Notes
9. Sources and References

1. PRELIMINARY ENGAGEMENT LETTER AND POWER OF ATTORNEY

[DATE]

[CLIENT NAME / OFFICER]
[CLIENT ADDRESS]

Re: Engagement — West Virginia Tax Division Audit, Tax Periods [YEAR(S)]

Dear [CLIENT]:

This letter confirms our engagement to represent [CLIENT] in connection with the audit initiated by the West Virginia Tax Division by Audit Selection Letter dated [DATE]. Enclosed is West Virginia Tax Division Form WV-2848 (Power of Attorney). Please sign where indicated; we will file the executed form with the auditor and the Tax Division's Auditing Section.

The scope of our engagement includes (i) responding to all Information Document Requests; (ii) attending audit conferences; (iii) preparing position statements; (iv) negotiating any proposed assessment; and (v) advising on appeal rights to the Office of Tax Appeals if a Notice of Assessment issues.

[FEE / RETAINER TERMS]

Sincerely,

[ATTORNEY NAME]

2. AUDIT ENGAGEMENT ACKNOWLEDGMENT TO TAX DIVISION

[DATE]

West Virginia Tax Division
Auditing Division — [FIELD OFFICE / CHARLESTON]
[ADDRESS]

Attn: [AUDITOR NAME], Auditor

Re: Audit Selection Letter dated [DATE]
Taxpayer: [TAXPAYER NAME]
FEIN: [XX-XXXXXXX]
Audit Period(s): [DATES]
Audit / Letter ID: [________________________________]

Dear [AUDITOR NAME]:

This firm represents [TAXPAYER] in connection with the above-referenced audit. Enclosed are:

1. Executed Form WV-2848 (Power of Attorney) authorizing the undersigned to receive correspondence and represent Taxpayer;
2. Completed Pre-Audit Questionnaire (TSD-450 enclosure); and
3. Initial document production index.

Pursuant to W. Va. Code § 11-10-5 and TSD-450, Taxpayer will cooperate fully in the examination subject to the rights enumerated in the West Virginia Taxpayer Bill of Rights (TSD-4). Taxpayer respectfully requests:

☐ All future communications regarding this audit be directed to the undersigned representative;
☐ A pre-audit conference to discuss scope, methodology, and records to be produced;
☐ Reasonable advance notice (not less than ten (10) business days) for any on-site visits;
☐ A complete list of all books, records, and documents the auditor expects to review;
☐ Identification of the specific tax types and periods within the scope of the audit;
☐ A copy of any sampling agreement before sampling commences;
☐ Receipt of audit results electronically through Taxpayer's MyTaxes account.

Taxpayer reserves all rights, including (i) the right to assert applicable statutes of limitations under W. Va. Code § 11-10-15; (ii) the right to refuse production of privileged materials; (iii) the right to a closing conference before issuance of any Notice of Proposed Assessment; (iv) the right to file a Petition for Reassessment with the Office of Tax Appeals within sixty (60) days of any Notice of Assessment under W. Va. Code §§ 11-10-9 and 11-10A-9; and (v) the right to assistance from the West Virginia Taxpayer Advocate under W. Va. Code § 11-10-19a.

Respectfully,

[________________________________]

[ATTORNEY NAME], W.Va. State Bar No. [####]

3. INFORMATION DOCUMENT REQUEST (IDR) RESPONSE COVER LETTER

[DATE]

[AUDITOR NAME]
West Virginia Tax Division
[ADDRESS]

Re: Response to IDR No. [____] dated [DATE]
Taxpayer: [TAXPAYER NAME] | FEIN: [XX-XXXXXXX]
Audit Period(s): [DATES]

Dear [AUDITOR NAME]:

Enclosed (or transmitted via SecureFile / MyTaxes upload) is Taxpayer's response to the above-referenced Information Document Request. The response is organized as follows:

1. Confidentiality. All documents produced are tax return information protected by W. Va. Code § 11-10-5d and § 11-10-5s. Each page bears the legend "CONFIDENTIAL — WV TAX AUDIT — NOT FOR FURTHER DISCLOSURE."

2. Withheld documents — confidentiality protocol. Item 5 contains personal customer data subject to [GLBA / HIPAA / contractual NDA] restrictions. Taxpayer will produce upon entry of a mutually-agreeable confidentiality stipulation.

3. Withheld documents — privilege. Item 6 is being withheld on grounds of attorney-client privilege and the attorney work-product doctrine. A privilege log identifying the document by date, author, recipients, and general subject matter is enclosed.

4. Objections preserved. Taxpayer objects to IDR Item [__] on the grounds that it (a) seeks documents outside the audit scope or audit period; (b) seeks information protected by privilege; (c) is unduly burdensome relative to its relevance; or (d) seeks information not within Taxpayer's possession, custody, or control. Taxpayer is willing to confer with the auditor to narrow the request.

5. Reservation. Production of any document is without waiver of any privilege or evidentiary objection, including the right to claw back inadvertently produced privileged materials.

Please direct any follow-up requests to the undersigned. We appreciate the auditor's professionalism and look forward to a productive examination.

Respectfully,

[________________________________]

[ATTORNEY NAME]

4. POSITION STATEMENT ON PROPOSED ADJUSTMENTS

[DATE]

[AUDITOR NAME] and [AUDIT SUPERVISOR]
West Virginia Tax Division

Re: Position Statement — Proposed Adjustments
Taxpayer: [TAXPAYER NAME] | FEIN: [XX-XXXXXXX]

Dear [AUDITOR / SUPERVISOR]:

Pursuant to TSD-450 and the West Virginia Taxpayer Bill of Rights, Taxpayer submits the following position statement on the proposed adjustments described in the auditor's preliminary findings dated [DATE].

4.1. Summary of Proposed Adjustments

4.2. Issue 1 — [Title]

Facts. [CONCISE FACTUAL SUMMARY.]

Law. [CITE: W. Va. Code § 11-__-__; relevant CSR; case law.]

Analysis. [APPLY LAW TO FACTS.]

Position. The proposed adjustment of $[AMOUNT] should be withdrawn.

4.3. Issue 2 — [Title]

Facts / Law / Analysis / Position. [REPEAT STRUCTURE.]

4.4. Issue 3 — Partial Agreement

Taxpayer agrees with $[AMOUNT] of the proposed adjustment and will pay that amount upon issuance of a corrected assessment. Taxpayer disputes the remaining $[AMOUNT] for the reasons stated.

4.5. Issue 4 — Penalties

Penalties asserted under W. Va. Code §§ 11-10-18 and 11-10-18a should be abated because Taxpayer has demonstrated reasonable cause and absence of willful neglect. Specifically:

• Taxpayer relied in good faith on the advice of qualified tax counsel [NAME / FIRM] dated [DATE], attached as Exhibit __;
• Taxpayer maintained adequate books and records under W. Va. Code § 11-10-7;
• Taxpayer cooperated fully with the audit;
• The position taken on the return had substantial authority within the meaning of generally applicable standards.

4.6. Closing Request

Taxpayer respectfully requests a closing conference under TSD-450 before issuance of any Notice of Proposed Assessment, and reserves all administrative-appeal rights under W. Va. Code §§ 11-10-9 and 11-10A-9.

Respectfully,

[________________________________]

[ATTORNEY NAME]

5. RECORDS RETENTION AND PRIVILEGE LOG TEMPLATE

5.1. Records Retention Reminder

Under W. Va. Code § 11-10-7 and W. Va. C.S.R. § 110-15-14 (sales/use tax), Taxpayer must preserve:

☐ Federal and West Virginia returns as filed (with workpapers);
☐ Books of original entry, general ledger, and trial balances;
☐ Sales journals, purchase journals, fixed-asset registers, and depreciation schedules;
☐ Exemption certificates received from purchasers (sales tax);
☐ Resale certificates issued and received;
☐ Apportionment workpapers and supporting documentation;
☐ Bank statements, cancelled checks, and electronic-payment records;
☐ Payroll records, W-2s, and 1099s;
☐ Contracts and correspondence relevant to the tax positions taken;

for the longer of (i) three (3) years from the later of due date or filing date of the return; (ii) the period during which any assessment could be made (e.g., where a six-year limitation under § 11-10-15(b) applies for substantial omissions); or (iii) any extended period covered by an executed Form WV-100 or similar consent.

5.2. Privilege Log Format

6. CLOSING CONFERENCE REQUEST

[DATE]

[AUDITOR / SUPERVISOR]

Re: Request for Closing Conference Prior to Notice of Proposed Assessment
Taxpayer: [TAXPAYER NAME] | FEIN: [XX-XXXXXXX]

Dear [AUDITOR / SUPERVISOR]:

Pursuant to TSD-450 and the West Virginia Taxpayer Bill of Rights, Taxpayer respectfully requests a closing conference before issuance of any Notice of Proposed Assessment, to discuss the issues set forth in the Position Statement dated [DATE]. Taxpayer is available [DATES].

A constructive conference may resolve or narrow the disputed issues and avoid the need for an OTA petition. Taxpayer is willing to discuss alternative apportionment, sampling adjustments, and penalty mitigation in good faith.

Respectfully,

[________________________________]

[ATTORNEY NAME]

7. RESERVATION OF RIGHTS AND STATUTE OF LIMITATIONS PRESERVATION

7.1. Statute of Limitations. Taxpayer asserts that any assessment must be made within three (3) years of the later of due date or actual filing of the return at issue under W. Va. Code § 11-10-15. Taxpayer does not consent to any extension absent a separately executed waiver.

7.2. Form WV-100 / Consent to Extend. If the Tax Division requests a consent to extend the assessment period, the consent must (i) be in writing; (ii) specify the tax types, periods, and issues covered; (iii) state an outside date; and (iv) be limited to the narrowest scope necessary. Counsel will not execute an open-ended consent.

7.3. Refund Claim Preservation. To the extent Taxpayer made any overpayments during the audit period, Taxpayer reserves the right to file a refund claim under W. Va. Code § 11-10-14 within three (3) years of the due date of the relevant return.

7.4. All Other Rights Reserved. Taxpayer expressly reserves all rights under the West Virginia Taxpayer Bill of Rights, the U.S. and West Virginia Constitutions, and applicable federal and state law.

8. WEST VIRGINIA PRACTICE NOTES

• Auditor outreach starts with a Pre-Audit Questionnaire. Per TSD-450, the Tax Division sends an Audit Selection Letter accompanied by a Pre-Audit Questionnaire. Failing to return the questionnaire timely provokes an unfavorable audit posture; counsel should complete it carefully and not volunteer information beyond what is asked.
• Records retention. W. Va. Code § 11-10-7 requires preservation of records for at least three years; the Tax Commissioner may extend that period in writing. Sales/use tax-specific recordkeeping rules appear at W. Va. C.S.R. § 110-15-14 and § 110-15-14a.
• MyTaxes portal. The Tax Division now delivers most audit results electronically through the taxpayer's MyTaxes account. If the taxpayer does not have a MyTaxes account, raise the issue with the auditor early; do not let delivery problems jeopardize the 60-day appeal window.
• Confidentiality. Tax returns and return information are confidential under W. Va. Code § 11-10-5d. Mark every produced page CONFIDENTIAL.
• Audit scope and sampling. Insist on a written sampling agreement before any statistical projection. Object to "block sampling" that overstates use-tax exposure on capital projects.
• Closing conference. Request a closing conference in writing before any proposed assessment issues. The conference is the last and best opportunity to resolve issues administratively without invoking OTA.
• Penalty defense. Reasonable-cause defense under W. Va. Code § 11-10-18a is highly fact-specific. Document reliance on counsel, qualifications of the advisor, and the substantial-authority basis for the position.
• 60-day clock. Once a Notice of Assessment issues, the taxpayer has sixty (60) calendar days to file a verified Petition for Reassessment with the Office of Tax Appeals under W. Va. Code §§ 11-10-9 and 11-10A-9. The deadline is jurisdictional.
• Taxpayer Advocate. Where channels fail, escalate to the West Virginia Taxpayer Advocate under W. Va. Code § 11-10-19a (telephone via the Tax Division main number).
• Payment posture. Interest under W. Va. Code § 11-10-17 accrues throughout the dispute. Counsel should evaluate (i) whether to make an undesignated deposit to stop interest accrual without concession, or (ii) whether to pay-and-protest under § 11-10-14 and pursue a refund track.
• Federal RAR. A federal Revenue Agent's Report adjusting income or deductions must be reported to the WV Tax Division within ninety (90) days under W. Va. Code § 11-21-77 (income tax). Failure to do so extends the WV statute of limitations.

9. SOURCES AND REFERENCES

• W. Va. Code Ch. 11, Art. 10 (Procedure and Administration) — https://code.wvlegislature.gov/11-10/
• W. Va. Code Ch. 11, Art. 10A (Office of Tax Appeals) — https://code.wvlegislature.gov/11-10A/
• W. Va. C.S.R. tit. 110, ser. 15 (Sales and Use Tax recordkeeping) — https://www.law.cornell.edu/regulations/west-virginia
• TSD-4 — West Virginia Taxpayer Bill of Rights — https://tax.wv.gov/Documents/TSD/tsd4.pdf
• TSD-450 — Audits — https://tax.wv.gov/Documents/TSD/tsd450.pdf
• WV Tax Division — https://tax.wv.gov/
• MyTaxes portal — https://mytaxes.wvtax.gov/
• WV Office of Tax Appeals — https://taxappeals.wv.gov/
• Form WV-2848 (Power of Attorney) — https://tax.wv.gov/

Disclaimer: This template is provided for informational purposes only and does not constitute legal or tax advice. A West Virginia-licensed tax attorney must review and customize this document before submission. Verify all citations and current procedures before use.