Today’s tip is about sales and use tax audits and why a business was chosen for a sales and use tax audit by the taxing authority. Here are just a few reasons why businesses are scheduled to be audited by the taxing authority.

When it comes to sales tax compliance, shipping, handling, and freight charges are often treated differently. Understanding the distinctions between these terms is crucial for businesses to accurately apply sales tax regulations.

Here’s a fun and simple list of five common mistakes to avoid when choosing sales tax software:

This tax tip is about 3 things you should do before you or your client receives a Notification of Routine Sales and Use Tax audit letter. If you follow these guidelines, your life or at least the audit will be a lot simpler. These measures should be in place before the sales tax audit starts.

There are differing sales and use tax ramifications when dealing with taxable items given to employees versus items that are sold to employees. The difference is who pays the sales or use tax.

Every jurisdiction has sales and use tax exemptions available to certain taxpayers. Exempt organizations include governmental agencies and other exempt entities can include educational, religious, and charitable organizations.
When making sales to exempt organizations, it is important that to obtain the appropriate documentation required to substantiate the tax-free nature of the sale.

When you are going through at sales and use tax audit, the audit will not only review source documents, but they will also review your accounting records, i.e., the GL. Auditors focus on certain accounts of interest. These are accounts where they know there may be sales and use tax compliance issues.

This tip is about what you can do when you discover that you have overpaid sales or use tax on the purchase that you make for your business. As we discussed in an earlier video, there are various sales and use tax exemptions available to purchasers for miscellaneous reasons.

This sales tax tip is about document retention. Specifically, making sure you have a plan in place when it comes to scanning your documents. We talk about it a lot because it is so important to have a good document retention policy in place, especially in a sales and use tax audit context.

In our discussion, we are focusing on bad debts and how they affect the sales and use tax that you report to the taxing authority. We also discuss the importance of documenting which bad debts were written off and how important it is in an audit context.

Over the course of my career I have regretted becoming engaged by select clients.  I thought it would  be good to share some of my experience dealing with difficult clients and the red flags that can help other small businesses identify them.   

The effectiveness of an accounting software upgrade is underminded if your accounting staff refuses to use it. You must manage your expectations and help your staff wrap their heads around the new technology in order to make the most of your oftentimes expensive upgrade.

A few years ago, the Wayfair case was everywhere. It changed the landscape regarding sales tax nexus and registration requirements for remote sellers all across the country. Let’s talk about what the case may mean for you and your business. For some people, it means very little. For other people, the world exploded.

Sales and use tax compliance is a complex thing. Knowing whether you must register in a jurisdiction (i.e., do you have nexus), whether what you sell is taxable, what tax rate you should charge, the applicable sales tax exemptions, etc. can be a lot to digest when you are starting your business. One thing that all business owners can do to make their lives easier is have clear and concise invoices.

Once you involved in an audit, you must understand that the taxing authority has broad powers as it relates to what documents they can request. If a state tax auditor requests data, you should produce it. If you don’t, there are consequences that are very unpleasant. Find out how much power the auditor has and how to navigate the process.

Congratulations! You have survived your sales tax audit. While you can breathe a sigh of relief, don’t think that the tax authority is through with you because the audit is over.

Depending on the sales tax audit results, (i.e how much money your company owed in sales and use tax), you may be audited again.

The key to all audits is documentation. You must prove what you do, that you collected the correct amount of sales tax, all sales tax collected was remitted, etc.