The Challenge
When this winery first signed on with Protea, the job was simple. Post the monthly sales. Reconcile the balance sheet. Close the books on time. Nothing complicated.
A few months into the relationship, that changed. Management called us about sales tax returns that hadn’t been filed — some of them going back close to two years.
That wasn’t part of what we’d agreed to do. We didn’t even know the filings were behind, honestly. We assumed someone else was handling that piece. Turns out the winery had gone through a stretch without anyone specifically watching day-to-day finances, and sales tax slipped through.
Then came the audit. The state came back with an assessment of roughly $250,000 — unpaid tax, penalties, and interest, all rolled together. For a business this size, that number didn’t add up. Once we started digging, we found a likely reason why: the audit hadn’t given credit for a number of non-taxable transactions that should have brought the bill down.
What’s at Stake?
When we first began working together, the winery was not accurately costing its Delinquent filings aren’t just an inconvenience. They open the door to penalties, interest, more scrutiny from tax authorities, and audits that can take months to resolve — and incomplete or misclassified records only make untangling everything harder.
There were really two problems here, and they called for different things. Getting current on the missing returns was a matter of just doing the work. Getting the audit number right was a matter of proving it — and until someone did that proving, the winery had no way to know if $250,000 was a fair number or a padded one.
How Protea Financial Helped
We didn’t stop the monthly accounting work to deal with this. Both things happened at once.
On the filing side: eight quarterly sales tax returns, two years’ worth, prepared and submitted in about a month.
On the audit side: we went back through the winery’s sales tax
and payment history and matched it against the point-of-sale system, transaction by transaction. Two things came out of that. Some periods where the winery had actually overpaid. And a batch of non-taxable sales that never got credited in the audit. We laid all of it out for management, along with the options for pushing back — appeal included.
The Outcome
Results
Looking Ahead
Most sales tax problems don’t happen overnight. They build up slowly, usually during a stretch when nobody’s specifically responsible for that part of the books. A regular reconciliation and one person clearly on the hook for filing deadlines will catch most of this before it turns into a six-figure problem.
This winery caught it in time and moved on it fast — which is really the difference between a manageable correction and a business-threatening one.
