Andrew Leahey Andrew Leahey

Sales Tax Audit and/or Reassessment

Navigating a Sales Tax Audit: Your Action Plan

Discovering that your business is on the list for a sales tax audit by state or local authorities can be daunting, to say the least. The wave of anxiety, dread, or frustration is common, yet not insurmountable. Our seasoned team has been the compass for numerous entities through the murky waters of sales and use tax audits, accruing a wealth of insights on effective audit management strategies.

Your journey through the audit begins with the official notification from the state, usually the department of revenue. This moment, rather than a cue for despair and panic, is your gateway to take charge. The foremost task for the audit timeframe is to assemble the pertinent records. This narrative will delineate three pivotal aspects to meticulously collect and ready your documents for the sales tax audit.

  • Audit Records Assemblage:

Kickstart your audit preparation by pinpointing the audit span. Ensure the availability of both requisitioned and foreseeable records for the designated audit timeframe. Identifying the location of your records, be it digital or physical, is essential, followed by acquiring them. Although a majority of records these days are digital, their accessibility may vary. If they reside in a physical vault, off-site, or are managed externally, the timeline to retrieve these records or digital files is now. Initiating this endeavor early is crucial to allow ample time for compilation and scrutiny before presenting them to the auditor.

Necessary materials for launching a sales tax defense typically encompasses:

  • Comprehensive general ledger,

  • Bank records,

  • Point of sale (“POS”) maintenance contracts,

  • POS service records,

  • Journal entries,

  • Sales and purchase journals,

  • Sales and purchase invoices,

  • Resale and exemption certificates,

  • Depreciation schedules,

  • Financial statements,

  • Federal and State income or franchise tax returns,

  • Bank Statements,

  • Sales and use tax returns and worksheets, and

  • Shipping documentation.

Post compilation, a thorough review of the records to verify their integrity and completeness is imperative, ensuring no gaps in the data throughout the audit period.

  • Further Guidance on Audit Navigation

We invite you to take an active role in your audit defense by reaching out to us as early as possible. Our trove of experience and expertise is at your disposal, ready to guide you through the audit landscape. Your proactive steps today can significantly impact the audit outcome, and we are here to guide you. Contact us to explore more on how you can turn the audit notification from a moment of dread.

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Andrew Leahey Andrew Leahey

First Charges Under Minnesota Anti-Zapper Law

On August 25th the first individual, Hailong Li of New Hyde Park, N.Y., was charged with two counts of false or fraudulent sales tax returns and one count of manufacturing and providing sales suppression devices in contravention of Minnesota’s anti-zapper law.

Li designed and made use of the “Happy World” sales suppression program, helping restaurants in Burnsville and Duluth, Minnesota to suppress sales for purposes of sales tax evasion.

Li admitted to developing the software, but indicated he did not provide it to anyone.

The full press release from the Minnesota Department of Revenue is available here.

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