What Documents are required in a sales tax audit? What exactly happens during a sales tax audit? This video covers the documents that are required and why they are needed.
Transcript
Have you been selected for a sales tax audit? I’m Mansoor Ansari with Nexus Tax Defense. The first step in a sales tax audit is the auditor either giving you a phone call, email, or visiting your place of business. Then, they will give you something called a document request list and you will need to provide all the documents on that list. The most common question that we get is what documents are normal to be demanded in a sales tax audit. This is when people start to get worried because they might not have kept the best records.
Federal income tax returns are used to compare your gross sales. Sales tax returns are used to see what was qualified as exempt and how much you reported. Bank statements will be used to determine your deposits. Fixed asset lists, or depreciation schedules, will show the auditor what you have purchased for your own business, and the sales tax that must be collected on that item. A general ledger will show how much money was earned and at what time. Third-party network transactions such as statements from merchant services companies will also need to be provided to show the origination of the revenue. Supporting schedules that were used to prepare the sales tax returns for the audit are also very important.
Call us if you have any questions about your sales tax audit. Thanks.
