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Allied Tube & Conduit
Reducing a tax liability by 90%
A software implementation caused a major issue during a state sales tax audit, resulting in a half-million-dollar liability for Allied Tube & Conduit. The company leveraged Wipfli’s strong understanding of state sales and use tax to untangle the situation and reduce the liability by 90%.
The Challenge
Allied Tube & Conduit manufactures building components in Wisconsin, while its parent company, Atkore International Holdings, is headquartered in Illinois. Atkore implemented new software for the Allied plant and capitalized it when the state proposed taxing it to the tune of $550,000. The liability came to bear during a Wisconsin sales tax audit. The predicament highlighted the complexity of large software implementations and interstate tax laws — and required support from a firm with deep knowledge of Wisconsin tax law.
The Solution
Over several months, Wipfli worked with Allied staff to sift through the project’s paper trail and disparate vendor data. The team segregated numerous vendor tasks and their assigned costs to determine which activities were considered taxable services under Wisconsin law. The team also segregated the internal implementation costs and third-party programming costs.
I knew we needed Wisconsin-specific assistance to address the proposed audit adjustments. Wipfli provided their expertise and Wisconsin Department of Revenue experience to reduce the assessment.
The results
Ultimately, Wipfli was able to calculate and demonstrate the actual tax base: the software license itself, plus some installation costs. Instead of the proposed $550,000 Wisconsin state tax adjustment, Atkore and Allied paid just under $55,000 in tax.
