(1) It is the policy of this State to prohibit any arrangement
between the Department of Revenue, a county, a municipality, or any other taxing
authority within the State and a private auditing firm for the examination of
a taxpayer's books and records, if the firm's compensation is determined, in
whole or in part, by the amount of taxes assessed or collected. Any arrangement
whereby the private auditing firm agrees or has an understanding with the taxing
authority that all or a part of the firm's compensation otherwise payable will
be waived or otherwise not paid if there is no assessment or no collection of
tax or if less than a certain amount is assessed and/or collected is prohibited.
(2) For the purposes of this regulation, "tax" means and includes
any tax, license fee, or other charge payable to the State of Alabama, any agency
thereof, any county or municipality or agency thereof, or any other taxing authority
within the State including, but not limited to, sales and use taxes, rental
taxes, business license taxes, or franchise or any other fees or charges payable
by the taxpayer on account of its activities or property in, or income, sales,
gross receipts or the like derived from sources within, the State or any county
or municipality. For purposes of this regulation, "private auditing firm" means
and includes any person, firm or corporation that is not a governmental entity
and that is engaged in the business, in whole or in part, on behalf of the State
or any other taxing authority within the State such as counties, municipalities
or any agency thereof, of auditing or examining the books and records of a taxpayer
to determine whether one or more taxes have been properly collected, paid and/or
remitted by the taxpayer.
(Section 40-2A-6, Code of Alabama 1975) (Adopted through APA effective February 1, 1995)
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