Ten tips for a successful sales tax audit

If you do, you can also avoid spending a significant amount of time digging out old records, and in the end, quite possibly saving a lot of expense, too. North Dakota has special taxes that extend beyond sales and use. Special Event Vendor Reporting Form – If you do not have Excel, download and complete the PDF form. For reporting purposes, a vendor includes anyone attending an event with the intent of selling, displaying, or marketing. Local Taxes – City or County Taxes – Cities and counties may levy sales and use taxes, as well as special taxes such as lodging taxes, lodging and restaurant taxes, and motor vehicle rental taxes.

Hospitality workers who do not report their tips, taxi drivers who collect off-meter fares, retail store owners who sell merchandise off-book, etc. To update the individual responsible for filing the sales and use and withholding returns, visit ND TAP. Special Event Vendor Reporting Form – This is the preferred method for reporting. To register to collect and remit applicable sales and use tax in North Dakota ONLY, complete the online application on ND TAP.

Small business audits

High Ten Tips For A Successful Sales Tax Audit industry – Your industry is known for substantial non-compliance or under-reporting sales taxes. The auditor reviews your records over a period of days, weeks, or months in an effort to discover oversight or fraud and promote compliance with tax laws. The auditor’s goal is to increase revenue for the state and apply penalties when a business owes taxes. If your business has been selected for an audit, consider using a specialist, such as a CPA, a sales tax expert, or a tax professional who specializes in state and local taxes .

Some states require the taxpayer to request the refund directly from the vendor while other states allow a taxpayer to request a refund directly from the tax authorities. However, this may not always be possible if, for example, a customer goes out of business. A schedule should be prepared which shows the amount of the discrepancy as well as the reason for the discrepancy. In addition, the taxpayer should ensure that the sales by state schedule agrees to the sales reported on the general ledger to determine if there are any discrepancies. Sales tax audit defense is one of the cornerstones of our sales tax consulting practice. We’ve represented hundreds of clients who were undergoing sales tax audits.

tips on how to manage sales tax compliance

The information in this article is presented solely for educational purposes and should not be construed as actual advice in a specific audit. Any reference to taxability issues has been purposely omitted. The length of the visit may vary from a few hours to a few days. The audit may begin with an entrance conference to discuss the scope of the audit and to determine timing needed to conduct the review. That come across my desk which have been selected by the IRS for an audit may include some questions that I cannot answer off the bat.

• First and foremost, establishing a single point-of-contact ensures that no mixed messages will be sent to the state auditor.
• Be sure to keep receipts and document all expenses as it can make things a bit ore awkward if you don’t.
• We provide guidance across multi-dimensional areas of expertise for individuals and businesses.
• To support the exemption in these instances, a seller must obtain a properly completed exemption certificate from its buyer.
• She has 20 years experience in sales and use tax compliance and was a former Texas State Auditor tax and accountant who has a passion for helping businesses achieve 100% compliance.

If you’re not able to use ND TAP to pay for your watercraft tax, the One-Time Sales and Use Tax Return form can be used. Watercraft owners are required to register their vessels with North Dakota Game & Fish before operation. To register a watercraft, proof of tax payment to the boat dealer or to the Office of State Tax Commissioner is required. The State of North Dakota provides automatic translation for nd.gov websites, courtesy of Google Translate.

Best Practices for Managing a Sales Tax Audit

This is frequently determined by a minimum number of sales or minimum dollar amount of sales, generally during a year. You can also generate nexus by traveling into states , using subcontractors in given states to fulfill contracts with customers, or even by just exhibiting at trade shows. Missing documentation complicates an audit and may cause penalties that you may not actually owe.

• TIP #7 – Taxpayers should make sure that purchases are booked to the proper corresponding general ledger account.
• Remember here as well that it is best practice to keep all audit communication in writing.
• This is intended as a general guide, and is not an all-inclusive discussion of Iowa sales and use tax law.
• Use tax is most often imposed after the sale takes place and only on goods and services on which sales tax was not collected.
• The next step is to gather the documents required for an audit while also controlling the scope of information you give to the auditor.
• Mehrdad Talaifar is a recognized expert in sales, use, and value-added tax compliance automation with more than 30 years of indirect tax experience.