Sales Tax and Use Audits can be painful,
especially for small and mid-sized businesses.
For unprepared people, these audits shed light on areas of noncompliance. A Sales and Use Tax audit is a review of your business records by the Department of Revenue to determine if you are correctly reporting this tax.
The auditor will review your record, explain any errors you’ve made and tell you how to correct them. They will make recommendations to help you eliminate similar errors in the future. He or She may want to discuss the types of records you’ll need to provide. The sales tax auditor will check for missing records. Items that cannot be accounted for will be considered taxable unless you can provide information to show otherwise.
The following records will be requested in a Sales Tax and Use Audit
- general ledgers, chart of accounts and financial statements
- business returns and supporting worksheets for Sales and Use Tax filings
- depreciation schedules and supporting invoices
- sales invoices and accounts receivable journals
- vendor invoices and accounts payable journals
- cash journals and check registers
- other records that are relevant to the audit
The Sales Tax Auditors will verify that you correctly charged, collected and paid state and local taxes. Sales tax must be charged on all taxable items and services unless you have documentation showing why they are exempt.
They will also verify that you correctly paid sales or use tax on taxable items you purchased.
You owe use tax when:
- You purchased items from a vendor who did not charge sales tax
- You bought exempt for resale (such as from a wholesaler) and later used it in your home or business
- You bought items from an out-of-state vendor who did not charge sales tax.
Why do you Need Rink & Robinsons’ help?
There are a lot of factors which can change the outcome of a Sales Tax Audit. Remember the Auditor works for the Internal Revenue Service and are digging deep for information. Generally the auditor is looking for money that you may or may not owe. Having a representative from Rink & Robinson, CPA’s is the best choice when you are facing an audit. Our professional staff members have over 65 years of experience working with auditors and know how to properly represent you to keep your cost to a minimum. Without representation, you may end up paying a large sum of money to the IRS.