What to Do When Faced With a Sales Tax Audit
Sales tax audits can be one of the most harrowing circumstances for a business owner to have to endure. This is especially true if the business owner has not kept track of all records and did not save all the original documents pertaining to all of their business transactions. Business owners must keep hard copies of documents pertaining to every single aspect of their business. They need to keep all invoices, receipts, orders, cash register tapes, and everything else. If you are audited, the government will want to see your original paperwork, not just your sales logs and bookkeeping records.
Many business owners receive sales tax audits because they made honest mistakes or there were accidental oversights that may have occurred. Sometimes interpreting your state’s sales tax laws can be a difficult task. It is always best to clarify any sales tax questions that you may have as soon as they arise. That way you can limit the amount of damage that can be done by not following your state’s laws. If you are unsure of some of your state’s sales tax laws, contact a professional that can explain them to you. Legal terminology can be confusing, but you cannot afford to make any assumptions when it comes to your state’s sales tax laws. Seek out professional advice if you don’t understand how to deal with and document tax exempt transactions.
Sales tax audits will take some time. Once you have been audited you will be required to meet with an auditor and they will explain the process and require that you get together the information that they are requesting of you. You can also choose to have an attorney represent you during the auditing process. Then you will have to turn over the requested information within a specified amount of time.
Once the government representative assesses all of the information that has been presented in the case, they will determine if your business does in fact owe back taxes or if you have provided sufficient information to prove otherwise. If you end up owing money you will be able to work out a payment plan if you cannot pay the amount in full. A tax attorney can sometimes apply for an offer in compromise if, for example, you are no longer in business or have otherwise lost your income flow. The attorney will try to come up with an offer that you may pay the government in response to your debt. The government can choose whether or not to accept the payout figure. If they do accept your offer in compromise, your debt will be satisfied.