When it comes to the odds of being audited by a state for sales tax, it’s not a case of if, but when. So we are creating this series of SALES TAX AUDIT posts which can assist you in handling the audit - and in keeping the assessment to a minimum.
We do NOT advocate evading taxes that are legally required and we do NOT see auditors as your enemy - or ours. However, we do understand the audit process very thoroughly and through our experience in handling hundreds of audits, we know how the system works. We’ve worked for companies with revenues of less than $1 Million through to companies with revenues in the billions – and in total we’ve saved our clients over $61 Million in audit assessments. That means our clients were over-assessed in the first place by $61Million. How is that possible?
Basically, it boils down to a simple concept. The State views everything you buy as being subject to tax. You’re guilty until proven innocent, in other words. Now we know everything is not necessarily taxable, but you have to be able to prove all of that to an auditor. Your best bet is to keep the auditor from scheduling items in the first place - because it’s easier to keep it off the auditor’s schedules - than to get it taken off later.
In most cases, using an expert advisor to help will ensure you get the best results. However, it’s also possible for you to handle much of this process yourself and to then have an experienced audit advisor review your work to see if more can be done. (BTW – please consider us as a resource if you have any questions at all. You can access the Peisner Johnson firm profile here to learn more about our services - or to submit a direct question or request – by using the orange Request a Consultation link.)
With that in mind, this new series of audit posts - written in non-legalistic and non-technical terms could help you. Naturally, it is meant to be a general guide. The applicability to your specific situation will vary (greatly, in some cases) according to your particular circumstances.
As we publish posts in the series we’ll list titles below (and activate links once they are available) so that you can easily access the information that is most beneficial to your circumstances. (BTW - If there are additional AUDIT issues you’d like us to cover, we welcome your suggestions and requests.)
Audit Prep: Meet the Auditor to Set the Right Tone & Rules
Audit Fieldwork: 4 Key Tips to Ease Audit Process
Audit Fieldwork: Sampling Methodologies - 3 Key Issues
Audit Fieldwork: Waiver of the Statute of Limitations
Audit Fieldwork Complete: Appeals & Redetermination
Other recent “Audits and Sales Tax” posts by Andrew H. Johnson, CPA:
- Sales Tax Audit Prep: The Audit Notification Letter
- Sales Tax Audits: Not If, But When - So Best to Prepare