Sales Tax Audit Tip: Question Everything

If you’ve been unfortunate enough to be subject to a sales tax audit, you need to do yourself a favor and be proactive about your audit. Auditors’ jobs are to find “missing” money for state coffers but your job when you’re being audited isn’t to sit back and comply. Pushing back against auditors with polite and logical discussions about your sales tax assessment is the best way to ensure you’re getting a fair audit. Don’t Be Afraid To Discuss Sales Tax Audits. Auditors have a reputation for being the last word in sales tax.

They’re viewed as being able to hand down judgments like a court by many businesses—where what the auditor rules is the final say. The truth is that auditors might not know the complex law specific to your industry as well as you might or that they might get things wrong. Unlike a judge in a court, auditors can always be challenged during the initial audit. The key to getting a fair audit is being proactive about your audit and ensuring that your business is being treated appropriately. When you receive a sales tax audit report, review every item and make sure that you agree with everything that has been included in your audit as missing sales tax. If an auditor has a different opinion from yours on the interpretation of a law, produce a copy of the rule with a sample invoice and have a polite and logical discussion with your auditor about why you believe your sales tax actions were correct. In some cases, auditors will listen to your arguments and remove the items from your sales tax assessment.

Don’t be afraid to put an auditor’s actions into question—just be sure to do it in a professional manner. Negotiate Your Sales Tax Audit Large companies negotiate for better sales tax assessments. If you’re a small or medium sized business you can use many of the same techniques as large companies to get better sales tax assessments. The first step is to figure out what assets you have in a sales tax audit arsenal to negotiate with. Past sales tax overpayment is a good starting point for your company that can help reduce your sales tax assessment. Also keep in mind that if you can pay a large portion of your sales tax assessment immediately, you can negotiate for the rest of the amount to be dropped. Just like debtors, sales tax agencies would rather have money now than no money or less money in the future.

Latest Articles

Sales Tax Software

Sales Tax Software

Sales tax calculations and filing can be done by hand. When you make a sale, you figure out whether the goods and services are taxable and whether you have nexus in the buyer's tax jurisdiction. More on that later. Once you've determined that you need...

read more
Customer Service and Your Sales Tax Solution

Customer Service and Your Sales Tax Solution

Sales tax is complicated. We've just gone through the annual flurry of back to school tax holidays, for example. If you're a remote seller of clothing, you probably sell mostly through retail. But you might have some direct to consumer sales. In some...

read more
Sales Tax Holidays for E-commerce

Sales Tax Holidays for E-commerce

A lot of our clients are manufacturers, contractors, or in some other industry that doesn't usually have to think much about sales tax. Retailers know they have to collect sales tax, and usually plan for it. We often hear from people who had no idea...

read more