Addressing an Operator’s Overpayments Holistically
A Colorado oil and gas operator’s longtime sales tax compliance staff left the organization, taking a great deal of institutional knowledge with them. With no matrix left behind to calculate liabilities, the company found itself paying sales tax on about 90% of purchases—and turned to Merit Advisors for assistance.
Merit reviewed more than 20,000 invoices from a two-year period and discovered the client was unnecessarily paying sales tax on most of its transactions. Taking a holistic approach, our team:
- Phased out unnecessary sales tax payments
- Quantified past overpayments
- Worked with the client to ensure long-term compliance
A $4 million refund claim was filed with the state of Colorado to recover the client’s overpayments. Merit helped develop a matrix accounting for various state-specific tax nuances, and trained multiple departments to avoid future overpayments—as well as the need for third-party tax reviews. Thanks to Merit, the client now pays sales tax on only 20% of all purchases.