Sales Tax Audit Resolution

Do Not Sign the Auditor Findings

Often the state sales tax auditor will ask you to sign their findings and agree to the audit. This is the classic one-sided agreement that only benefits the state. There is almost never a good reason to sign.

Signing may sacrifice critical protest rights and make the assessment immediately due. If you opt not to sign, the assessment is still due — but you retain the option to protest it.

Check Your Deadline — Then Check It Again

The most crippling mistake we see daily is not responding within the allotted deadline. In most states, the response window is 30 to 60 days. The assessment notice will tell you where and when to send your protest.

Failure to protest within the deadline can seriously limit — or completely extinguish — your right to fight the assessment. Check the deadline, check it again, and do not miss it.

Note: Many businesses first learn of the problem when their bank account is frozen or collection activity begins. If this happens, contact us immediately — we have experience reopening closed audits for lack of proper notice.

Challenging the Facts

State sales tax auditors are human and they make mistakes. If numbers are wrong, a sample is faulty, or there is a plain error — this is your chance to point it out.

Developing and submitting an organized package of evidence will resolve most factual issues on protest that could not be resolved directly with the auditor. This includes reconciling your federal return to your state return, proving you have proper exemption documentation, and confirming you paid sales tax on online purchases and fixed assets.

Appealing the Law

Sales tax has infinite grey issues as to whether a particular transaction is taxable. Auditors are trained to assess items that are grey — so it should come as no surprise that many audits have legal issues at stake.

To combat grey legal areas, start by reviewing the applicable statute — that is the law. From there, review rules and regulations, state cases, agency interpretations, and other materials.

In most cases, you do not need a $500-plus per hour state tax lawyer. Our team strives to match your needs with the right professional at a reasonable price.

Win on Technicality

On occasion, there is a fundamental flaw with the audit from a technical perspective. Common technicalities include: the statute of limitations, tolling of the SOL during the audit, timing of proposed vs. final assessments, and execution of audit agreements.

Our team recently eliminated over $20 million in sales tax assessments on a technical mistake in a particular state. This is where focused expertise pays for itself many times over.

Get Some Help, or At Least Get Some Free Guidance

Should you hire a state sales tax lawyer or sales tax pro?  There are some situations where you can try to take this on yourself.  If you think the assessment is mostly accurate and you just want to fight the penalties, you probably can do it alone.  If, however, you are unsure if it is correct, or you know it needs to be challenged you should get a state sales tax professional on your team.  As the state power of attorney allows, you do not need a state-licensed attorney to challenge the state sales tax assessment.  Instead, you should be looking for someone, like our team at Sales Tax Helper, to help you fight your assessment.  At a minimum, call us for a free consultation and we can discuss your state sales tax assessment with you for free!

In many states, when the final assessment is issued, it is often off the auditor’s desk at that point.  While the preliminary work papers present an opportunity to work out issues with the auditor, the final assessment is a completely different ball game.  Unlike the audit work papers, the assessment should be challenged with the appeals office, not the local service center or sales tax auditor.  Many times, the business accountant, CPA, or its tax attorney, who is not accustomed to sales tax issues incorrectly responds to the auditor.