By ADAM SICHKO
Albany Business Review

The National Federation of Independent Business lobby has asked the New York state comptroller to probe the auditing practices at the state tax department.

The state chapter of NFIB requested an audit from Comptroller Thomas DiNapoli on Thursday.

The lobby, which represents 10,000 small businesses in the state, wants DiNapoli to investigate the auditing practices of the state Department of Taxation and Finance-judging whether they are appropriate and compliant with what the lobby called "generally accepted auditing practices."

The Albany Business Review has reported on controversial tax amnesty programs the tax department conducted earlier this year.

The department is also escalating audits, under orders from Gov. David Paterson and state legislators to generate more revenue. In his 2010-11 budget proposal, Paterson called for the hiring of 330 more auditors to raise an extra $220 million a year.

Michael Elmendorf, who runs the state chapter of the NFIB, said the tax department is aggressively targeting businesses.

In particular, NFIB is worried about so-called "desk audits," where tax officials use a series of industry-specific metrics to calculate what the department thinks the business should be paying in taxes.

"The department alleges significant-and, in the view of the business owners, wildly inaccurate-underreporting in a process where the taxpayer is presumed guilty until they can prove their innocence," Elmendorf wrote in his letter to DiNapoli.

Business owners, Elmendorf said, "are completely stymied by the stratospheric claims of underreporting with which they are being confronted by the tax department-claims that, again, are based upon no review of the actual records of the business."

Elmendorf also said the audits are poisoning the state's notorious business climate.

DiNapoli's office is reviewing NFIB's request. The tax department said the letter also is under review.

Elmendorf said the NFIB isn't trying to lambaste the tax department, saying the lobby "has enjoyed a very positive working relationship with the department on a number of issues."

"However, such (law) enforcement should be fair and reasonable," Elmendorf said. "We do not believe the often overly aggressive and prosecutorial approach taken by the tax department in some of those situations-or the use of broad generalizations to assert that a business has evaded taxes-have met those tests."