Sales Tax Audits FAQs

Your Sales Tax Audits questions, answered.

Frequently Asked Questions for
Sales Tax Audits

What triggers a sales tax audit?

Various factors like discrepancies in returns, high sales volume, or changes in business activities. From to time-to-time tax jurisdictions focus on specific industries due to rates of non-compliance in the industry and ambiguity in the tax laws.

How long does a sales tax audit typically last?

Depends on complexity but can range from weeks to months.

What records should I prepare?

Sales records, invoices, purchase orders, exemption certificates, and sales & use tax returns supporting schedules and documentation.

What will the auditor ask for?

Information about your business, sales records, tax calculations, and compliance procedures.

Do I have to answer all questions?

No, consult your tax professional first. You have the right to refuse unreasonable requests.

What happens if I disagree with the auditor's findings?

You can negotiate or appeal the assessment with documentation and justification.

Will I be penalized if I made an error?

Penalties depend on the nature and intent of the error. Cooperation and proactive correction can minimize penalties.

Do I have to pay interest?

Audit assessments are typically charged interest on any assessment calculated. This amount can be negotiated down and often completed waived.

What happens after an audit?

The auditor will issue a report with findings and potential tax adjustments.

Do I have to pay the proposed assessment?

Not immediately. You have the right to review, appeal, or negotiate the terms with the tax authority. If necessary, some states allow payment plans.

How can I avoid future audits?

Maintain accurate records, comply with tax laws, and seek professional guidance for complex transactions.