If your business is being audited

To ensure fairness, equity and education.

Each county may have its own criteria; however, a random selection is recommended for all counties.

Our office will contact you to schedule an appointment, at which time we will tell you which documents you will need.

The current year plus five years, per North Carolina General Statute 105-312(g).

These three documents make up the taxpayer’s financial records and are needed to validate what should be reported on the listing form. Depreciation schedules list all assets owned by the business, whether fully depreciated or not. Only certain parts of the income tax return are needed to validate capitalized and expensed assets. Trial balances, which include balance sheets and profit and loss statements, provide more detail than the tax return and are used to validate assets.

Certain schedules from the income tax return can be used if a trial balance is not available.

Most vehicles are assessed for property taxes at annual registration renewal. Certain vehicles, such as multi-year tagged or unregistered vehicles, are still subject to personal property taxes and should be listed annually on the listing form. Information to verify vehicles owned by a business can include annual registration documents and vehicle titles.

In most cases, no. When a federal return combines several locations into one return, it cannot be used in the review. However, at times a North Carolina state return may be requested.

Sampling may be considered. However, the relevance is determined by the county, as each review is different and may vary from business to business.

The amounts on the annual listing form should be historical cost: the original cost of an item when first purchased, even if someone other than the current owner purchased it. Acquired cost can be the cost of an asset bought new (historical cost), but it more commonly describes the cost of an asset bought used.

Improvements made by or for the business to real property it leases or uses. They must be listed by the business whether or not they will stay in place at the end of the lease, unless the county has determined they will be appraised as real property. Contact the county if you are unsure how your improvements will be appraised.

The Business Personal Property listing form instructions describe what to list, and the NC Department of Revenue publishes a standard listing form with instructions. To list supplies, review your supply accounts and divide the year-end total by twelve to arrive at one month on hand, or take an actual inventory of all supply accounts on January 1. NC General Statute 105-274 states that all property, real and personal, should be listed. NCDOR property tax forms, including the business personal property listing form.

Business personal property is listed on a calendar-year basis. The lien date is January 1, so list the assets owned as of December 31 of the previous year. You may need two fiscal years of statements to cover a full calendar year.

Contact the county about the value on your Discovery Letter and how it translates into taxes owed. The amounts on a discovery letter represent value, not taxes owed.

Usually, the discovery letter has instructions at the bottom on how to appeal. North Carolina General Statute 105-312(d)(4) requires the notice to include “a statement to the effect that the listing and appraisal will become final unless written exception thereto is filed with the assessor within 30 days from the date of the notice.” A taxpayer would therefore need to write a letter to the Tax Assessor or Tax Administrator in the county that sent the notice, within 30 days of the notice, stating that they are appealing it. The county will then give instructions on what to do next.