Sales Tax Audit Defense

With over 83% of sales and use tax audits resulting in assessments, the states visit early and often while the taxpayer becomes a never-ending revenue source. Upon engagement, TaxMatrix will defend the taxpayer against the audit, ensuring that proper audit methodology is employed to reduce the assessment, and identify and secure refunds along the way.

Our sales tax audit defense practice is managed by our client engagement team comprised of tax managers, former state auditors and tax attorneys well-versed in audit procedures. Our expert team always ensures your final assessment is fair and that any refunds due to you are identified and credited accordingly.

TaxMatrix can manage the audit process from start to finish or can simply serve as a final set of eyes. Our audit team will gather the files necessary to build the case and determine which issues are ideal for appeal. We manage the information flow between the client and the state taxing agency to ensure complete and accurate responses, while assisting with accelerated dispute resolution processes to reduce the costs associated with sales tax audit defense activities.

 

Understanding the Sales and Use Tax Audit Process

The vast majority of businesses selected for an audit wind up paying big fines. The tax code is just too complicated, and there are too many factors involved to ensure your books are 100 percent correct. Unfortunately, because of the way audits are processed, one mistake can be counted as thousands without the proper negotiation tactics. Let’s cover the way businesses are selected for audit, how records are collected and how they’re assessed.

You can greatly lower your chances of an audit, though some businesses are on a set schedule and others are chosen at random. There’s nothing you can do to guarantee you avoid the process. Any service making that promise is best avoided. We have a robust team of experienced professionals working for the benefit of our clients exactly for that reason. If it were possible to always fly under the radar, that’s the only service we would provide!

Once selected, your state department of revenue will request different types of information from you. Then begins a lengthy back-and-forth. You supply documents. The department’s computers analyze the information, and then they request more paperwork based on those assessments. You will have a myriad of deadlines to contend with. It’s essential you provide your paperwork in the correct way by the stated deadline to avoid a penalty.

Know that the paperwork you are turning in will serve as an example of how your business handles specific types of transactions. If the sample transaction was processed incorrectly, the system will assume all such transactions violated tax law. This is the reason fines rise so quickly and why you need a professional at your side to manage the fallout. There are ways of proving the sample was an isolated incident. There are also ways of pre-assessing your paperwork to detect – and correct – these issues before they’re submitted.

Examples of the records you may need include:

  • Fixed-asset purchases
  • Non-asset expense purchases
  • Sale and use tax returns
  • Exemption certificates

For most small businesses, an audit will take 60 hours or more from your work time. For a large corporation, negotiations and discovery could last for years. Hiring an outside sales and use tax audit service is a smart move regardless of size.

How TaxMatrix Will Help

Our sales tax audit defense practice is managed by our client engagement team comprised of tax managers, former state auditors and tax attorneys well-versed in audit procedures. Our expert team always ensures your final assessment is fair and that any refunds due to you are identified and credited accordingly.

TaxMatrix can manage the audit process from start to finish, or can simply serve as a final set of eyes. Our audit team will gather the files necessary to build the case and determine which issues are ideal for appeal. We manage the information flow between the client and the state taxing agency to ensure complete and accurate responses, while assisting with accelerated dispute-resolution processes to reduce the costs associated with sales tax audit defense activities.

Our sales tax audit defense services include:

  •  Audit representation
  •  Audit coordination
  •  Audit sampling analysis and evaluation
  •  Taxability determinations
  •  2nd and final review (as a best practice)
  •  Audit appeals

We meet directly with auditors, dispute resolution officers, administrative hearing attorneys, and other agents to clearly identify all positions that impact our client’s ability to achieve a favorable outcome. We represent our clients’ interests to ensure they pay only their fair share of taxes.   

In addition, every client gains no-fee access to our Tax Help DeskSM for ongoing compliance support, saving you time and money when you need it most. (help@taxmatrix.com

Our team looks forward to partnering with you to support your company’s compliance and recovery objectives. If you are interested in the extra security that comes with sales tax managed audits, please contact us today.