Finished an audit for a county government complex in northern Florida — 5 buildings on FPL. Found a rate classification error and recovered $18,000. Felt great about it. Two months later the county's attorney called and asked why I didn't check whether they should be exempt from the gross receipts tax. I hadn't even looked at it. He filed the exemption himself and is now collecting an additional $12,000 in refunds that I should have found. My credibility with this client is damaged and I left $3,600 in fees on the table (my 30% of $12K). All because I skipped the tax exemption check.
Forgot to check tax exemption — left $12K on the table
This is painful but it's a critical lesson. Tax exemption status should be a standard check on every audit — especially for government entities, nonprofits, churches, and educational institutions. Build it into your checklist as a mandatory item, not an optional one. The check takes 2 minutes: look at the bill for sales tax or gross receipts tax line items, then verify whether the entity qualifies for an exemption. If they do, verify that the exemption is currently on file with the utility. If it's not, file it and claim the refund.
I added tax exemption to my checklist after a similar experience. Now it's the third thing I check on every audit — right after rate classification and demand charges. Takes almost no time and catches money that other auditors miss.
Added it to my checklist permanently. The $3,600 I left on the table is the cheapest tuition I'll ever pay for a lesson I'll never forget.