Preparing for Sales Tax Audit – Remember Following Things

For businessmen and entrepreneurs, taxes are among the top priorities for smooth running of their business ventures. Tax authorities keep close eye on their tax payments. They closely check and evaluate the taxes. There are several kinds of taxes that businessmen need to pay. Sales tax is one of them. Tax authorities keep auditing the sales tax time to time. This year you could be the lucky one. Therefore, it is always suggested that you should keep all your records in organized manner. If you fail to keep the documents of your expenses and payments, you would have immense amount of difficulty to prove that you have paid your taxes without any delays and availed tax resolution that you were entitled to.

If you have got a letter from tax authority for sales tax audit, first thing that needs to be done is preparing your data accordingly. While auditor goes through your filing he/she would evaluate the accuracy and validity of the amount you have paid. Things that allow the auditor evaluate are corporate book, sales tax returns, federal income, charts of accounts, sales invoices and everything that integrates the financial records of your business. If you have all these documents handy, during audit you won’t find it hard to face the auditor’s complicated questions. Tax audit is a time consuming process. At times, audit can be conducted for the second time and it would depend upon the auditor. If he/she wants to examine sales records in more detail, then audit will get stretched for the second day as well.

Nobody wants to face the audit for two days. Therefore, you should be ready with the cash register tapes and exemption certificates that give a clear and detailed picture of the payment of your taxes. Keep Xerox copies of all the documents ready because in some cases, auditor needs to take the proof along with him/her. In case, your sales tax is quite complicated then you should employ services of sales tax consulting firm. These firms are run by tax professionals that specialize in computation of sales tax rates and organizing paperwork for the audit. Their experience and knowledge will never let you feel helpless in front of the tax auditors. They will organize all the required documents efficiently and represent your sales tax audit effectively.

Tax auditors are human beings therefore, it is not mandatory that they are going to make perfect decision. If you are not satisfied with the tax auditor’s findings after tax audit, you have a right to file an appeal against the decision. In this case, your case will go the court and all of your tax records will get checked more carefully. So, file an appeal only when you are ready for long legal battle.