A sales tax audit is used to promote compliance with tax laws and serves as a means of increasing state revenue. As part of the ordinary course of business, most companies eventually will undergo a sales and use tax audit.
Most auditors are professional and even friendly, but please don’t mistake that professionalism for friendship. While few auditors will admit it, their primary goal is to issue a substantial sales and use tax assessment. Sales tax auditors frequently believe that businesses cheat or at least intentionally try to skirt the sales tax law.
Auditors begin most audits with the attitude of determining how much the business owes—not whether the business owes anything at all. Should the auditor find a transaction where the company erroneously paid tax, it is doubtful they will inform you of the overpayment.
They are not your friend.
Their focus is on increasing tax assessments.
They rarely notify you of overpayments.
It is our mission to see that your business is treated fairly on a sales and use tax audit.
We help ensure that gray areas in the sales tax law are interpreted in your favor.
Defend against unfair assumptions or erroneous projections about your business’s revenue.
Advocate for your business in gray areas of the tax law.
Push back when auditors overstep or make mistakes.
While it is wrong to intentionally underpay taxes, it is also wrong for the government to excessively tax a business simply as a matter of convenience or to balance a budget.
Understanding what prompts an audit can help you proactively manage risks. Some of the most frequent triggers include:
Industries known for cash transactions or high sales tax liability are more likely to be audited, such as:
Restaurants
Construction companies
Retail businesses
Discrepancies between sales tax filings and other reported financial information often raise red flags.
Businesses that have had prior issues during audits are more likely to be audited again.
Reports from disgruntled employees, former partners, or even competitors can trigger audits.
Many businesses make avoidable mistakes that can worsen the outcome of an audit. Some of these include:
Failing to keep proper records
Providing too much information without legal review
Not responding promptly or thoroughly to auditor requests
Ignoring advice from legal or tax professionals
Preparation and professional guidance are your best defenses against a difficult audit experience.
Keep detailed and accurate records of all sales, exemptions, and tax filings.
Regularly review your own records to ensure compliance before the state does.
Engage with experienced tax attorneys or accountants at the first sign of an audit.
Always review communications with auditors through legal counsel to avoid unintended admissions.
Facing a sales tax audit without experienced legal guidance exposes your business to serious risk. An attorney can help:
Interpret complex tax laws in your favor
Negotiate with auditors to reduce assessments
Challenge improper findings
Ensure the audit process respects your legal rights
Contact us today to ensure your business is protected during the sales tax audit process. Whether you’re preparing for an upcoming audit or are currently involved in one, experienced legal support can help minimize the disruption to your business and reduce your financial exposure.
The primary goal of an Illinois sales tax audit is to ensure compliance with tax laws and identify underpaid taxes. While audits are part of regular business oversight, they are also a significant source of revenue for the state.
Businesses are more likely to be audited if they operate in high-risk industries (e.g., restaurants or construction), show discrepancies in tax filings, have a prior audit history, or are reported by whistleblowers or competitors.
Frequent mistakes include poor recordkeeping, oversharing with auditors without legal review, delayed responses, and ignoring professional legal or tax advice.
Preparation involves maintaining accurate records, conducting internal compliance reviews, engaging legal professionals early, and strategically managing communications with auditors through counsel.
Legal professionals help protect your rights, interpret complex tax regulations, challenge unfair assessments, and negotiate better outcomes, significantly reducing the risks and financial impact of the audit.
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Ansari Law Firm is a multi-state business and state tax law firm, with offices in Texas (Dallas, Fort Worth, San Antonio & Houston), Georgia and Illinois.
Ansari Law Firm is a multi-state business and state tax law firm, with offices in Texas (Dallas, Fort Worth, San Antonio & Houston), Georgia and Illinois.
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