It may be necessary to conduct a site tour and interview key personnel to determine the accuracy of the MIC. Items to consider include:
A. Why do a site tour?
- See the operations and relevant processes.
- Ensure qualified property is used in the qualified activity.
- Ensure assets are placed in service in California.
- Understand technical jargon.
- Learn job title(s) and name(s) of potential employee(s) to interview.
- Discover potential issues. For example, dual-purpose property, property is in place but not being utilized, property is inherently permanent or is a structural component, or property is used before or after the manufacturing process.
B. Where to go?
- Where the property is being used. For example, manufacturing plant(s), intermediate or end product manufacturing or processing sites, research and development facilities, and recycling sites.
C. What to do in advance?
- Do an Internet search of the taxpayer and the taxpayer's industry for information such as descriptions of the manufacturing process, typical equipment used, pictures, diagrams of the manufacture process, specifications of the equipment and process, or product schematics.
- Obtain a directory/location/department numbers of corporate facilities.
- Obtain facility use plans to verify what is performed at the site and determine if the taxpayer performs the activity elsewhere. Different sites may perform different functions (i.e., is the property being used is a near-by facility).
- Obtain a site layout or map of the facility.
- Obtain videotapes, booklets and leaflets from the marketing department.
- Obtain a description(s) of the manufacturing process(es) with identified MIC property.
- Determine which property to view. Remember materiality.
- Study the facility and operations.
- Request organization chart(s) and resume(s) or job description(s) for "on-line" employee(s), i.e., an employee(s) familiar with how the asset is used. Determine who will be interviewed and arrange appointments with key personnel to be interviewed at the site. Leave sufficient time between interviews. If possible, make interview appointments on different days.
- Describe what will take place during the tour and confirm, in writing, that the taxpayer agrees with your understanding. Consider items such as:
- Location(s) and scheduled times.
- Interviews needed.
- Information and documents to review or copies to receive (e.g., invoices, contracts, etc).
- Special clothing, shoes, safety equipment needed.
- Special instructions, e.g., security concerns.
- Who will be accompanying the auditor in the tour, e.g., site manager, line manager, tax manager, tax representative, etc.
- Call the taxpayer 7-10 calendar days before the site tour to ensure the taxpayer's ready.
D. Who to take with you?
- Should you take another auditor(s) with you? Depending on how extensive the tour will be, the number of assets or manufacturing lines to review, documents to review or obtain, or how much needs to be accomplished during the time at the site, you may need the assistance of another auditor(s) to ensure you complete everything planned and that information is sufficiently gathered.
E. What to do on the tour?
- Gather as much information as possible. Ask questions of various plant personnel.
- For assets at issue, obtain the asset or serial number, manufacturer, and model number.
- Take more than one day if possible. This allows clarification of questions that may come to you after the initial site tour.
- Look for potential issues such as dual-purpose property, non-qualified property, property used before or after the manufacturing process, and property used in a non-qualified activity.
- Review or obtain copies of required documents available on site.
- Memorialize interviews and the tour as soon as possible. Compare and clarify notes every night. Identify open items and issues to discuss with the taxpayer.
- Use a tape recorder, take pictures, or use a camcorder if the taxpayer allows. Offer the taxpayer a copy of anything you produce, e.g., tapes, pictures or videos.
F. What to do after the tour?
- Put what you saw and did in writing as soon as possible, including names, titles, documents, etc. You may want to schedule time on your calendar for this purpose to ensure this is done immediately after the tour. The faster you memorialize the tour, the more likely you will remember more details.
- Provide a copy of your report to the taxpayer and allow the taxpayer the opportunity to respond to the information.
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