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Sales Tax Attorney San Antonio Texas

By December 7, 2023Texas Sales Tax

Sales Tax Attorney San Antonio Texas

A client of our law firm recently underwent a sales tax audit at their restaurant located in San Antonio, Texas. The major issues surrounding this audit are as follow:

1. Client reset their POS terminal one month prior to the audit initiation notice
2. Client did not keep record of their parking fees and instead included them in their gross sales
3. Client combined two of his unrelated businesses on one schedule C

Let’s discuss each problem….

Client reset their POS terminal one month prior to the audit initiation notice

By resetting the POS terminal, the client lost all of his records for the business. Besides bank statements, there was no other way to tell how much our client earned in gross sales. The auditor then simply used the bank deposits and applied the sales tax rate to the gross amount. What’s the problem? Even a bank transfer that is unrelated to gross revenue or a non taxable sale will be deemed a taxable sale.

Client did not keep record of their parking fees and instead included them in their gross sales

Valet fees are not subject to sales tax in Texas. However, since they were not separated and described as a different line item, the auditor grouped them into the taxable gross sales. Our firm had to go through each valet notebook and matched cars, customers, and payments.

Client combined two of his unrelated businesses on one schedule C

This could be the worst mistake our client made. By including the gross revenue of 2 businesses into one schedule C, our client was subject to double sales taxation. How does that work: Business number 2 deposits 500,000 into the bank account assigned to business number 1. Business number 2 already paid sales tax on their gross receipts. However, the sales tax return for business number 1 only shows the sales tax being paid on the gross receipts that from business number 1. To the naked eye it just looks as if business 1 had double the sales, which results in double the tax. Our firm was able to show the source of the income and this additional revenue was subtracted from the gross sales of business 1.

Sales tax audits require experience and depth in state and local taxation. This is not something that can simply be settled for less money.

Sales Tax Attorney San Antonio Texas

Ansari Law Firm

Author Ansari Law Firm

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