Tax Audit Protest and Appeal — Oklahoma

Tax Audit Protest and Appeal (OKLAHOMA)

Quick-Reference Summary

Part A — Informal Conference Request Letter

Sender Letterhead

[LAW FIRM / TAXPAYER REPRESENTATIVE]
[________________________________]
[________________________________]
[City], Oklahoma [Zip Code]
Phone: [________________________________]
Email: [________________________________]
OBA No.: [________________________________]

Date: [__/__/____]

SENT VIA:
☐ OkTAP — https://oktap.tax.ok.gov (Protest link) — Confirmation No. [________________________________]
☐ Certified Mail, Return Receipt Requested — Tracking No. [________________________________]
☐ Hand Delivery to Taxpayer Resource Center, 300 N. Broadway, OKC 73102

TO:
Oklahoma Tax Commission
[Audit / Income Tax / Business Tax] Division — Audit Section
Oklahoma City, OK 73194

RE: Request for Informal Conference — Proposed Assessment
Taxpayer: [________________________________]
FEIN / TIN (last 4): [____]
Proposed Assessment No.: [________________________________]
Issue Date: [__/__/____]
Tax Type: ☐ Income (Indiv./Corp.) ☐ Sales/Use ☐ Withholding ☐ Franchise ☐ Gross Production ☐ Motor Fuel ☐ Mixed Beverage ☐ Tobacco ☐ Other: [____]
Tax Period(s): [________________________________]
Total Proposed Assessment: $[____] (tax: $[____]; interest: $[____]; penalty: $[____])

To the Audit Section:

This firm represents [TAXPAYER NAME] ("Taxpayer") concerning the above-referenced Proposed Assessment. Before filing a formal protest, Taxpayer respectfully requests an informal conference with the audit team and audit supervisor to discuss the adjustments. A formal written protest will be filed within the 60-day period prescribed by OAC 710:1-5-10.1(c) to preserve Taxpayer's rights regardless of the outcome of this informal conference.

Taxpayer requests:

1. Conference held [☐ at OTC offices ☐ by telephone ☐ by videoconference];
2. Production of the audit narrative, workpapers, sampling methodology, and any third-party information relied upon;
3. The identity and credentials of the auditor and reviewing supervisor;
4. The statutes, OAC rules, and OTC rulings relied upon for each adjustment;
5. Any technical advice memoranda or letter rulings considered.

A Power of Attorney (BT-129) executed by Taxpayer is enclosed.

Respectfully submitted,

[Signature]
[Counsel Name], OBA No. [____]

Enclosures: Form BT-129 Power of Attorney; copy of Proposed Assessment.

Part B — Formal Protest / Petition

TAXPAYER'S WRITTEN PROTEST AND DEMAND FOR HEARING

Filed Pursuant to 68 O.S. § 221(C) and OAC 710:1-5-10.1

Date: [__/__/____]

SENT VIA:
☐ OkTAP — Confirmation No. [________________________________]
☐ Certified Mail, Return Receipt Requested — Tracking No. [________________________________]
☐ Hand Delivery to Taxpayer Resource Center

TO:
Oklahoma Tax Commission
[Audit / Income Tax / Sales Tax / Withholding] Division
Oklahoma City, OK 73194

I. Statement of Timeliness

1.1. The Proposed Assessment was issued on [__/__/____]. The 60th day thereafter is [__/__/____]. This Written Protest is filed on [__/__/____], within the 60-day window prescribed by OAC 710:1-5-10.1(c) and consistent with 68 O.S. § 221(C).

1.2. By filing this Protest, Protestant preserves all rights to (a) an oral hearing before the OTC Office of Administrative Law Judges; (b) appeal directly to the Oklahoma Supreme Court under 68 O.S. § 225; and (c) the trial-de-novo alternative in District Court under § 225(D) for periods beginning after January 1, 2014.

II. Statement of Deficiency Amount and Nature of Tax in Controversy (§ 221(C)(1))

III. Statement of Facts

3.1. Protestant is a [Oklahoma resident / domestic corporation / nonresident / out-of-state remote retailer] with principal address at [____].

3.2. For the periods at issue, Protestant filed Oklahoma [Form 511 / 512 / 200 / STS-20002 / WTH-10001 / etc.] reporting [gross receipts / income] of $[____] and tax of $[____].

3.3. On [DATE], OTC issued the Proposed Assessment based on [brief audit description — e.g., disallowance of single-sales-factor apportionment, recharacterization of services as taxable telecom under 68 O.S. § 1354, denial of resale exemption certificates, federal-RAR adjustment].

3.4. Protestant disagrees with the Proposed Assessment as set forth below.

IV. Clear and Concise Assignment of Each Error (§ 221(C)(2))

4.1. ☐ Statute of limitations. The audit period(s) ending [____] is/are barred by 68 O.S. § 223 (3-year SOL); no exception (fraud, unfiled, federal-RAR within § 223(D)) applies.

4.2. ☐ Factual error. OTC overstated taxable receipts / unreported sales / understated cost of goods. Specifically: [____].

4.3. ☐ Legal error — misapplication of substantive statute. Specifically: [____]. See 68 O.S. § [____]; OAC 710:[____]; [case].

4.4. ☐ Apportionment / sourcing error. OTC improperly applied/denied [single-sales-factor / market-based sourcing / cost-of-performance] under 68 O.S. § 2358.

4.5. ☐ Sales-tax exemption certificate disallowance. Valid exemption certificates under 68 O.S. § 1357 et seq. are enclosed for: [____].

4.6. ☐ Improper statistical sampling. Sample is unrepresentative because: [____].

4.7. ☐ Constitutional infirmity. ☐ Commerce Clause / Due Process / Equal Protection / Oklahoma uniformity (Okla. Const. art. X, § 5). Argument: [____].

4.8. ☐ Penalty waiver under 68 O.S. § 217.1. Reasonable cause exists because: [____].

4.9. ☐ Interest abatement to the extent attributable to OTC delay.

4.10. ☐ Other: [____].

V. Argument and Legal Authority (§ 221(C)(3))

[Each error assigned in Section IV is supported by argument as follows:]

5.1. [Error 4.1 — SOL]. 68 O.S. § 223 limits assessment to three (3) years from the date the return was filed. Protestant filed its return on [DATE]. The Proposed Assessment was issued more than 3 years later. Because no extension was executed and no statutory exception applies, the assessment is time-barred. See [case].

5.2. [Error 4.X]. [Continue argument with citations to statutes, OAC, and Oklahoma cases.]

VI. Demand for Oral Hearing (§ 221(D))

Protestant hereby DEMANDS an oral hearing before the OTC Office of Administrative Law Judges under 68 O.S. § 221(D), with at least ten (10) days' written notice as required by statute.

VII. Statement of Relief Sought (§ 221(C)(4))

Protestant respectfully requests that the Tax Commission:

A. Withdraw or modify the Proposed Assessment, reducing tax to $[____] (or $0);
B. Abate all penalties under 68 O.S. § 217.1;
C. Abate interest to the extent attributable to OTC delay;
D. Schedule an oral hearing before an ALJ;
E. Issue an order in accordance with the foregoing.

VIII. Verification (§ 221(C)(5))

STATE OF OKLAHOMA )
) ss.
COUNTY OF [____] )

I, [NAME], being duly authorized [as Protestant / as Protestant's authorized agent] and being first duly sworn, depose and say that the statements of fact contained in this Written Protest are true and correct to the best of my knowledge, information, and belief.

[Signature]
[Name and Title]

Subscribed and sworn to before me this [__] day of [____], 20[__].

_____________________________
Notary Public — My Commission expires: [____]

IX. Enclosures

• ☐ Copy of Proposed Assessment
• ☐ Form BT-129 Power of Attorney
• ☐ Audit workpapers and exhibits
• ☐ Tax returns at issue
• ☐ Documentary evidence (exemption certificates, books and records, federal returns, audit-workpaper rebuttal)
• ☐ Legal-authority schedule

Respectfully submitted,

[Signature]
[Counsel Name], OBA No. [____]
[Firm], [Address], [Phone], [Email]

Part C — Appeal Cover Letter to Tax Tribunal / Court

TAXPAYER'S PETITION IN ERROR / APPEAL FROM OTC FINAL ORDER

Filed Pursuant to 68 O.S. § 225

Date: [__/__/____]

SENT VIA:
☐ Oklahoma Supreme Court eFiling — https://www.oscn.net
☐ Hand Delivery to Clerk, Oklahoma Supreme Court, 2100 N. Lincoln Blvd., OKC, OK 73105
☐ Concurrent service on OTC General Counsel

I. Jurisdiction and Timeliness

1.1. This Court has jurisdiction over this direct appeal under 68 O.S. § 225(A).

1.2. The Oklahoma Tax Commission mailed the Final Order in this matter on [__/__/____]. The 30th day thereafter is [__/__/____]. This Petition in Error is filed on [__/__/____], within the 30-day jurisdictional period prescribed by 68 O.S. § 225(B).

1.3. Jurisdictional Condition Satisfied. Within the 30-day period, Appellant has:

• ☐ Paid in cash to OTC the total assessed amount of $[____] (tax + interest + penalty). See § 225(D); receipt attached as Exhibit B.
• ☐ Posted a bond approved by OTC in double the assessed amount ($[____]). See § 225(G); bond attached as Exhibit C.

This payment or bond is a jurisdictional prerequisite to this Court hearing the appeal.

II. Decision Below

2.1. Appellant appeals from the OTC Final Order issued on [__/__/____] in OTC Case No. [____], which [sustained / modified] the Proposed Assessment issued under 68 O.S. § 221. A copy is attached as Exhibit A.

III. Statement of the Case

3.1. Tax Type: [____]
3.2. Periods: [____]
3.3. Amount in Controversy: $[____] (tax: $; interest: $; penalty: $)
3.4. Procedural History: Proposed Assessment issued [DATE]; Written Protest filed [DATE]; ALJ hearing held [DATE]; ALJ Findings issued [DATE]; OTC en banc Final Order issued [DATE].

IV. Errors Assigned

Appellant assigns the following errors:

4.1. OTC's interpretation and application of [statute] is contrary to law.
4.2. OTC's findings are unsupported by substantial evidence in the record.
4.3. OTC misapplied the statute of limitations (68 O.S. § 223).
4.4. OTC erred in [factual / constitutional / procedural] respect: [____].
4.5. Penalty / interest were imposed contrary to 68 O.S. § 217 / § 217.1.

V. Record on Appeal

Per 68 O.S. § 225(B)(3), Appellant requests that the Tax Commission prepare and certify the record for filing with this Court within 30 days, consisting of all citations, findings, judgments, motions, orders, pleadings, rulings, and the transcript of all evidence introduced at the OTC hearings.

VI. Relief Requested

Appellant respectfully requests that this Court:

A. Reverse or modify the OTC Final Order;
B. Render judgment that Appellant owes tax of $[____] (or $0);
C. Order refund of payments made under § 225 with statutory interest;
D. Award costs;
E. Grant such other relief as just.

Respectfully submitted,

[Signature]
[Counsel Name], OBA No. [____]
[Firm], [Address], [Phone], [Email]

Exhibits: A — OTC Final Order; B — Receipt of cash payment to OTC; C — Approved bond (if applicable); D — OTC record citation list.

(Optional) Alternative — District Court Trial De Novo Under 68 O.S. § 225(D)

For tax periods beginning after January 1, 2014, Appellant may OPT to file a Petition for Trial De Novo in the District Court of Oklahoma County (or the county of Taxpayer's residence) within 30 days of the OTC Final Order. The dispute is heard by a district / associate district judge sitting without a jury if amount in dispute > $10,000; by a special judge if ≤ $10,000. An adverse District Court judgment is appealable directly to the Oklahoma Supreme Court in the manner provided for civil appeals.

Part D — Pre-Filing Checklist

• ☐ Calendared 60-day protest deadline (OAC 710:1-5-10.1(c)); confirmed current rule version vs. 68 O.S. § 221(C) text
• ☐ Calendared 30-day direct-appeal deadline (68 O.S. § 225(B))
• ☐ Calendared payment / bond posting within 30 days as jurisdictional prerequisite (§ 225(C)–(G))
• ☐ Decided between Supreme Court direct appeal vs. District Court trial de novo (§ 225(D)) for post-2014 periods
• ☐ Confirmed Proposed Assessment is within 3-year SOL under 68 O.S. § 223
• ☐ Filed Form BT-129 Power of Attorney
• ☐ Drafted protest with all five statutory elements: deficiency amount; clear assignment of each error; argument with legal authority; relief sought; verification under oath
• ☐ Demanded oral hearing in protest under § 221(D)
• ☐ Requested penalty waiver under 68 O.S. § 217.1
• ☐ Gathered exemption certificates (sales tax), apportionment workpapers, federal-RAR documentation
• ☐ Considered late-protest clearly-erroneous request within 1 year if deadline missed (§ 221(E); OAC 710:1-5-10.1(f))
• ☐ Filed via OkTAP and saved confirmation; or sent by certified mail with tracking
• ☐ Notarized verification page before filing
• ☐ Issued litigation hold; preserved books, records, communications
• ☐ Requested OTC produce complete audit narrative, workpapers, sampling methodology
• ☐ For § 225 appeal: arranged payment OR cash bond in double the assessed amount before filing
• ☐ Removed all <!-- GUIDANCE --> comments and bracketed placeholders prior to filing

Sources and References

• Oklahoma Tax Commission: https://oklahoma.gov/tax.html
• OkTAP (Online Filing): https://oktap.tax.ok.gov
• 68 O.S. § 221 (Protest): https://oklegal.onenet.net/oklegal-cgi/get_statute?99/Title.68/68-221.html
• 68 O.S. § 225 (Appeals): https://oklegal.onenet.net/oklegal-cgi/get_statute?99/Title.68/68-225.html
• 68 O.S. § 227 (Refund / demand for hearing)
• 68 O.S. § 223 (SOL on assessment)
• 68 O.S. § 217 / § 217.1 (Interest; penalty waiver)
• OAC 710:1-5-10.1 (Protests / Demands for hearing): https://www.law.cornell.edu/regulations/oklahoma/OAC-710-1-5-10.1
• OAC 710:1-5-21 to 710:1-5-49 (Practice and Procedure before OTC ALJs)
• Oklahoma Administrative Procedures Act: 75 O.S. § 250 et seq.
• Taxpayer Resource Center: 300 N. Broadway, Oklahoma City, OK 73102
• Oklahoma Supreme Court (OSCN): https://www.oscn.net
• Oklahoma Society of CPAs — Protest and Abatement Process (Aug. 2024): https://okcoscpa.org/images/meeting/081524/CPE/20240813_protest_process_with_otc.pdf