Law bans private auditors from charging taxpayers for the costs of conducting a tax audit

March 13, 2020

Alabama law prevents private, for-profit auditors from recovering costs associated with completing a tax audit directly from a taxpayer.

Act No. 2020-31 by Rep. Paul Lee, R-Dothan, and Sen. Clay Scofield, R-Guntersville, took effect March 11, 2020.

The state, cities and counties can by law contract with private auditing or collection firms to audit taxpayers and collect taxes due. This act prohibits those private auditing or collecting firms from recovering any of the following costs from an Alabama taxpayer:

  • Professional service fees, including but not limited to attorney fees and charges for accountant services.
  • Travel costs.
  • Salary or personnel-related expenses of the firm.
  • Auditing or collecting related costs.

A taxpayer who was charged more than $35,000 in expenses that private auditors normally charge to its government clients prompted this legislation, Lee said.

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Originally posted at 2 p.m. March 11, 2020.