Sales tax audit can be done on any business by a taxation body or agency as long as they collect sales taxes. This is necessary to determine if they have been submitting their taxes correctly. An examination of the accounting done by the business can determine whether or not their taxes have been paid. Audits can be done on companies that are not suspected of cheating on their taxes and of those that are but do not reflect sales. If an auditor appears at your business you are required to surrender all accounts to the auditor.
All governments must rely on taxes in order to carry out their core duties of national progression. In the United States, taxation is done at the state level. The rates of sales tax and the rules and regulations governing its collection are different in different states. A sales tax auditis the only way that the state can know if all the rules and regulations are being followed and if all the sales taxes have been remitted at the correct rate.
The tax records that a business should keep for a sales tax audit all vary from state to state. The taxation body will contact businesses off a pre-determined list, and advise them that their accounts need to be in order by a certain date.
A sales tax audit will require critical examination of your accounting records. The business is normally supposed to file the tax record with the state and disclose how many taxable sales were made and what was the total amount collected as taxes. This is the amount that you are supposed to remit as sales tax. Tax consultants can help you in the preparation of these records.
A tax audit will result if a crooked company claims exemptions even when there are taxable sales made. A true reflection of the sales tax liability of your business will be determined when an auditor goes through your filed tax records.
The results of a Sales tax audit will yield several outcomes. If it reveals that you have been paying your taxes correctly it will clear the name of your business. A penalty is levied against your business if you have not remitted all the sales taxes. It could also reveal that you overpaid your taxes, maybe because you paid sales taxes on services or goods that should have been exempted. Should this be the situation you can then file for a refund from the taxation body.
Taxation agencies in all states that collect sales taxes reserve the right to do a Sales tax audit of any businesses.
categories: Sales tax audit