The stress and time invested in a sales audit can be minimized by taking preemptive steps. Audits come both expectedly and as an unwelcome surprise. Its a smart move to have a tax professional lined up who is experienced with audits and what might trigger one based on your business.

Some corporate taxpayers are subject to audits due to their sales volume or business size, while other corporations are chosen due to an event such as store closing or bankruptcy.

What are some other causes that may trigger an audit?

Taxpayers with significant exempt sales or that have a large increase in the amount of exempt sales are also more likely to be audited often because there is some discretion in determining what constitutes an exempt sale. And on the flip side, a drop in taxable sales may make a taxpayer more susceptible to audit, as will claiming frequent refunds or large tax credits.

  • Taxpayers with a significant amount of exempt sales
  • The claiming of frequent refunds of large tax credits
  • A drop in taxable sales
  • Filing taxes late
  • Filing a return but not remitting use tax
  • When a vendor gets audited and they didn’t charge the proper use tax

In addition to considering forming a corporation (since sole proprietors tend to get audited more) the smartest move is to hire a tax professional to represent you in an audit.

Contact us now to make sure you’re in compliance and protected in an audit.