I recently went to the doctor. I hadn't been in a couple of years. With changing health insurance plans, I also had to change doctors which made it a little less convenient to go. While at the doctor, I had my blood drawn to test for different things, one of which was cholesterol. I got my test results and was shocked to learn my cholesterol was high. About ten years ago my cholesterol was high, I changed my diet and lowered it. Since then, admittedly, I have slowly not eaten as strict. However, I don't really eat that bad, relatively speaking. Meaning, I don't eat fried foods, I don't eat hamburgers, french fries, creamy, saucy food - or anything that tastes 'really' good, on a regular basis. In other words, I try to eat healthy. I am also an exercise addict. I lift weights and do some type of cardio about 4-6 times a week. I have been doing that since I was 13. So, again, when I heard my cholesterol was high, I was shocked.
Despite my diet being relatively good, I have eaten a lot of eggs (with yolks) and cheese over the past year or two. I love cheese (on just about everything). When I say I eat a lot of eggs, I mean several times a week. Thus, if there is one explanation for why my cholesterol is high, I am guessing that's it. So for now, I have cut out eggs and cheese. I have started eating oatmeal every day and have increased my cardio. I will get my blood rechecked in six months and learn if my new strategies worked.
Going through this, I jokingly said to my wife that if I never went to the doctor, I wouldn't have changed my behavior. I would not have known my cholesterol was high. I would have continued to eat eggs and cheese, no oatmeal. It's like when you take the car to the mechanic for a tune-up or oil change. We are all afraid the mechanic is going to find something serious and want us to fix it. We don't think there is anything wrong because the car has been operating completely fine.
This begs the question - is ignorance bliss? Is it better to live not knowing what is really going on, as long as everything is operating fine? Or is it better to know and change behavior before you have a real problem?
This real life story parallels what companies do with state taxes. As long as nothing bad is happening (audit, notices, etc.) or the pain isn't too bad (annual liabilities), a company doesn't change its behavior or take a closer look.
EARLY DETECTION IS KEY
Just like with your health, being proactive about state taxes is a smart thing to do. Reviewing tax positions and returns prior to filing or prior to an audit is recommended. Resolving an audit controversy at the audit level or appeals level is better than going to court (in most cases). Now, is better than later.
Have you taken a closer look at your state tax returns and positions lately? Or is ignorance bliss?