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CASE STUDIES

 

 

expense management reduction service, recovery audit, property tax audit, sales tax audit, Forth Worth Dallas Texas
corporate tax management audit cost reduction recovery Forth Worth Dallas Texas

 

Expense Recovery/Accounts Payable Audit

Client scenario: Nationwide manufacturer with extensive distribution network. CTMI hired in 2000 to conduct initial accounts payable audit. Past 10 years, client experienced multiple acquisitions and divestitures, system expansions and continues its effort to outsource accounts payable transactions processing.  Client also experienced significant staffing and management turnover during organizational changes.

  • Client processed high volume of payable transactions for plant operations, regional marketing and finance locations using centralized ERP system.
  • In addition to direct and indirect materials payments, another department electronically input marketing and rebate payments.

Action: CTMI provides ongoing support through numerous operational changes, assuring potential payment errors are readily addressed. 

  • CTMI built database to compare transactions across all ERP systems and data sources.  Our staff analyzes data to identify errors not easily apparent in typical AP audit.
  • Data is downloaded from client’s ERP system so no IT or operations support is required.
  • CTMI assists client in collecting aged, unresolved debit balances and provided support for the escheatment processing of uncashed checks due to insufficient client staff levels available to support these functions.

Results: CTMI remains respected business partner, providing ongoing value and expertise.

  • Client’s record of recoveries in excess of $5 million over past 10 years.
  • CTMI provides additional value-added input regarding supplementary controls to reduce incorrect payment incidences, as well as supports client with vendor reconciliation process, resulting in improved vendor relations.

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Expense Recovery/Accounts Payable Audit

Client scenario: Client is a multi-division manufacturing company. Firm was operating on highly customized ERP system that was non-integrated with purchasing.  The payable functions were centralized at corporate office and invoices approved at division/plants.

Action: CTMI reviewed internal control practices and identified additional errors by performing in depth analysis and conducting a thorough vendor reconciliation process. Client went through a business process outsourcing effort and an ERP transition during project. As a result, CTMI was challenged with recovering dollars paid out of both ERP systems.
 
CTMI provided feedback and insight on current and past errors identified that allowed client to build additional internal controls in the new environment. CTMI provided focused efforts during transition phase to ensure recovery of payment errors potentially lost.

Results: CTMI remains respected business partner, providing ongoing value and expertise.

  • Client’s record of recoveries in excess of $5 million over past 10 years.
  • CTMI provides additional value-added input regarding supplementary controls to reduce incorrect payment incidences, as well as supports client with vendor reconciliation process, resulting in improved vendor relations.

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Expense Recovery/Unclaimed Property

Client scenario: Multi-faceted U.S. Fortune 35 private company.  Past 50 years, client experienced multiple acquisitions and divestitures. In 2010, hired CTMI to research its subsidiaries Unclaimed Property held by varying state agencies.

Action: CTMI compiled database of Unclaimed Property nationwide identifying over 2,000 individual claims dating back to 1987.

  • Client has over 800 locations throughout U.S.
  • At project end, CTMI provided client with detailed report, identifying additional 200 claims outstanding where properties were dually owned.
  • Client saved additional money by reviewing and processing those claims separately. 
  • CTMI staff filed claims in a timely manner and provided required documentation to validate claims, without imposing on client for documentation.

Results: CTMI’s track record of recoveries for client in excess of $1.5 million over a one year, residing in over 30 states.

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Expense Recovery/Unclaimed Property

Client scenario: Client is nationwide Fortune 1000 company in healthcare and medical facilities industry. Client experienced hundreds of acquisitions and divestitures and name changes over the years. CTMI engaged with client in 2004 and continues to provide Unclaimed Property recovery services to date.

Action: CTMI compiled a database of all Unclaimed Property nationwide.  Our team identified over 1,000 individual claims residing throughout the states for their 300 locations. CTMI recovered these claims for businesses previously divested. CTMI identified and filed all claims and provided states with required documentation without imposing on client for documentation.

Results: CTMI recovered in excess of $600,000 in Unclaimed Property throughout 26 states. 

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Expense Recovery/Unclaimed Property

Client scenario: Client is a Fortune 500 utility company that distributes natural gas to residential, commercial and industrial customers. Client made acquisitions and mergers over the years. CTMI has been engaged with the client since 2008 providing Unclaimed Property recovery services. 

Action: CTMI compiled database of all Unclaimed Property nationwide and identified over 300 individual claims throughout client’s 190 locations.  CTMI filed claims and provided states with required documentation without imposing on client for documentation.

Results: CTMI recovered in excess of $600,000 in Unclaimed Property throughout 28 states.  

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Property Tax/Real and Personal Property, Appeals & Protests

Client scenario: Financial services company in construction planning stage of two twin office towers totaling more than 500,000 square feet.  Company engaged our consultants early in planning to explore credit and incentive opportunities.

Action: CTMI anonymously conducted extensive market research with responsible taxing jurisdictions to determine available incentives. 

  • CTMI presented projected number of new jobs, salaries and other economic factors related to project to local taxing jurisdictions to secure tax incentives. 
  • We analyzed construction costs to determine taxability of specific component costs. 
  • Our agents worked directly with Appraisal District to minimize the unabated taxes.

Results: Ten year tax abatements for both real estate and personal property.  Tax savings were in excess of $2 million over life of the incentives. Additionally, approximately $300,000 in tax savings were obtained in the first years related to value reductions with the Appraisal Districts.

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Property Tax/Real and Personal Property, Appeals & Protests

Client scenario: Agricultural product manufacturing company with multiple sites.  Company’s in-house tax department was unfamiliar with property tax procedures and regulations in multiple states.  CTMI hired to evaluate opportunities and correct possible filing errors.

Action: CTMI examined book asset and inventory data and conducted site tours to observe asset function and inventory flow.  CTMI identified improperly classified assets and an inventory reporting methodology that did not take advantage of statutory opportunities.  We worked closely with multiple tax assessors to remedy the over-reporting issues and substantially reduced the assessment.

Results:  CTMI lowered client's tax amount by over 5% first year and 16% second year.  Result was a net tax bill reduction in excess of $163,000. Our methodology continues to generate savings after initial contingency period is over.

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Property Tax/Real and Personal Property, Consulting

Client scenario: A national media publishing firm incurred significant costs with its printing facility expansion.  To meet compliance requirements, client submitted all expansion costs as support for its annual tax return.  Assessor assessed all reported costs, thereby inadvertently duplicating assessments for real and personal property.

Action: CTMI reviewed asset information and analyzed previous tax return filing methodology, toured facility and interviewed key personnel and discovered company had unknowingly over-reported for years.  CTMI worked with county assessing authority to adjust reporting basis of taxable assets.  We also worked within the statutory laws to secure cash refunds for several years of overpayment.

Results:  Client's current year tax liability reduced by over 30%; and net tax savings over $174,000.  CTMI negotiated and amended prior year tax returns, securing refunds for prior periods in excess of $392,000 cash back from tax collector. Net tax reduction exceeded $566,000 and client continues to benefit from revised filing methodology.

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Property Tax/Fixed Assets, Cost Segregation Study

Client scenario: Retail company with multiple sites invested approximately $19 million in capital expenditures over last 15 years.  Company acquired multiple new stores, renovated older stores, and applied the results from a 10-year-old cost segregation study to the new additions. The favorable depreciation deductions from cost segregation study were not applied retroactively to the properties prior to the study.

Action: CTMI performed overall cost segregation and fixed asset study on all stores.  Our review uncovered two major issues: assets that were improperly classified; and remodel expenses, repairs and renovation costs were erroneously capitalized.  Using current IRS case law and guidance, we performed a fixed asset study in more advantageous tax deductions.

Results:  Client realized $1 million tax benefit.

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Sales and Use Tax, Audit

Client scenario: International lighting manufacturer was facing a $980,000 sales and use tax assessment. Due to complexity of client’s operations, the Texas Comptroller of Public Accounts assessed tax on purchases not subject to Texas sales and use tax. 

Action: CTMI performed overall sales and use tax audit and discovered the erroneous assessment was due to the relationship complexity between client’s domestic and international vendors. The auditor interpretation erroneously assessed transactions that were never used in Texas and on services not subject to Texas sales and use tax.

Results:  Due to CTMI’s involvement and expertise, assessment reduced to $200,000.

Original Assessment          980,000.00
Final Audit Assessment      200,000.00
Total Savings                     780,000.00

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Sales and Use Tax, Managed Audit

Client scenario: Semi Conductor Manufacturer 

Action: CTMI performed sales and use tax overpayment review, which identified $400,000 in overpayments of sales and use tax. Client did not want to file state refund claim due to potential use tax exposure.  Since client suspected having a liability issue, CTMI advised to enter into the managed audit program in an upcoming audit to reduce penalties and interest related to any exposure issues while still capturing CTMI identified sales and use tax refunds. CTMI designed audit and worked with auditor and client throughout process.

Results:  Final audit resulted in saving the client over $1.3 million, including a waiver of penalty and interest. CTMI was able to recover credits identified in the original sales and use tax overpayment review during the audit.

Refunds                                           1,100,000.00
Waiver of Interest on Liability                  77,000.00
Waiver of Penalty on Liability                220,000.00
Total Savings                                    1,397,000.00

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Sales and Use Tax, Audit Defense & Overpayment Review

Client scenario: Pipeline company, Sales Tax Audit

Action: Client was audited for sales and use tax and was assessed over $1.1 million.  Client was erroneously assessed tax on nontaxable intercompany transactions, as well as purchases that were due either a refund or use tax had been remitted directly to the taxing authority.

Results:  CTMI provided auditor with documentation and detailed explanation of product usage and received credit for items where overpayments were made and erroneously assessed.  CTMI’s involvement reversed the assessment and received a credit.

Original Assessment       1,100,000.00
Final Audit Credit               250,000.00
Total Savings                  1,350,000.00

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Sales and Use Tax, Audit Defense & Overpayment Review

Client scenario: Luxury hotel and conference center, Sales Tax Audit

Action: Client had two entities facing a Texas audit assessment over $230,000.  CTMI conducted a sales tax audit defense along with an overpayment review for the same period of the sales tax audit.

Results:  Through additional negotiations, explanations and documentation, CTMI reduced the audit assessments and identified credits (refunds) used to offset the original assessment, which resulted in a $85,000 client credit.  CTMI provided training to accounts payable personnel to reduce future errors related to sales and use tax reporting.

Original Assessment        230,000.00
Final Audit Credit               85,000.00
Total Savings                   315,000.00

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Sales and Use Tax, Audit Defense & Overpayment Review

Client scenario: Oil and gas well drilling contractor, Sales Tax Audit

Action: Client faced a $550,000 use tax assessment. Taxing authority assessed tax on purchase transactions not related to clients Texas operations, and also on nontaxable services performed outside state lines.  Due to client’s accounting records complexity, CTMI performed a reconciliation of the assets to track their location at the time of the proposed assessment.

Results:  CTMI’s involvement reduced audit liability by over $400,000 and recovered more than $550,000 in use tax refunds.

Original Assessment        500,000.00
Final Audit Credit             400,000.00
Total Savings                   950,000.00

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Sales and Use Tax, Audit Defense & Overpayment Review

Client scenario: Mining company, Sales Tax Overpayment Review

Action: Client contracted a national state and local tax consulting firm to perform an overpayment review.  Two years later, CTMI performed a sales and use tax review, which included overlapping time periods from the previous consulting firm review.

Results:  CTMI’s detail-oriented approach netted client an equivalent refund in the overlapping review period, as the competitor’s original four year review period.  CTMI’s thoroughness resulted in a refund triple the size over our larger competitor.

Competitor Refund                35,000.00
CTMI’s Refund                    105,000.00
Additional Savings                70,000.00

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