Sales tax audit

A sales tax audit is an examination by a state’s Department of Revenue or equivalent agency to verify that a business has correctly collected, reported, and remitted sales & use  tax.

Who gets audited?

States use risk-based selection criteria;

  • businesses with high sales volumes
  • complex transactions
  • Inconsistent filing history
  • Certain industries are in higher risks than others
  • Random selections

A state would typically send a formal notice, and specify an audit period.