Is Your Business Under A Georgia Tax Audit?
Being notified and going through the procedure of a Georgia tax audit can be a daunting proposition. The process begins with your receipt of a Notice of Intent to Audit Books and Records from the Georgia Comptroller. The auditor will be looking for violations of Georgia tax law and whether additional taxes, along with penalties and interest, can be assessed against you.
You should understand from the start that a Georgia auditor’s job is NOT to help you accurately determine your tax liabilities. THE AUDITOR’S JOB IS TO FIND ADDITIONAL TAXES DUE. It is that simple. If the auditor can call into question an entry or record, then the auditor will do so – and usually project that one record across the entire 3-year audit period, exponentially increasing your proposed Georgia tax assessment.
Common Risks for Businesses Under Audit
Particularly with a business, the State will look for instances where your business has collected sales tax from customers but failed to remit all or part of these monies to the state.
Collecting but not remitting Georgia taxes (think Sales Tax or Unemployment Tax) is one of the worst possible things a business owner can do with regard to Georgia taxes.
If you consider penalties and interest to be painful, then you might be surprised to find out that collecting but not remitting taxes can land a business owner in jail. Under Georgia law, collecting but not remitting these “trust fund taxes” is considered stealing from the state. The business owner and employees can be charged as high as a felony under certain circumstances.
Representation During a Georgia Tax Audit
Even if you feel you have been compliant, we strongly recommend that you do not represent yourself during a Georgia tax audit. The Georgia auditors have many tricks up their sleeves that can limit your rights under Georgia law. It is vital to have a knowledgeable and experienced tax professional to assist you through all stages of the audit, from the initial notice through to its conclusion.
Georgia Tax Audit Protection
The State will ask to either do a “Desk Audit” in one of their offices or a “Field Audit” at your place of business. You should consider saying “NO” to either request, or better yet – let us say no for you. Do not let an auditor into your business; make the auditor come to your tax professional’s office. We know how to “control” the audit, so the auditor does not go on a “fishing expedition” looking for ways to accuse your business of underpaying taxes.
Common Types of Georgia Tax Audits
These are commonly the types of Georgia taxes that are audited (though corporate income tax and others can come under State review):
Sales Tax
Unemployment Tax
Corporate Income Tax
Audit Requests and Tactics
All auditors request certain records and ask questions regarding your business and accounting methods. Often the auditor will ask for things that they have no right to demand or will ask the taxpayer to sign documents that the taxpayer does not have to sign.
We know the games Georgia auditors play and how to defend against them.
Why You Need an Advocate
The State auditor has the authority to assess additional taxes plus penalties and interest. They can also give your case over to the criminal investigation division.
Georgia auditors may be highly trained in tax law, but they have been taught to constantly suspect you are underpaying tax and look for ways to prove it.
Don’t you want your tax professional to have greater knowledge and experience than the auditors who are coming to your business to LOOK for ways to accuse you of underpaying Georgia taxes?
Frequently Asked Questions
What triggers a Georgia tax audit for businesses?
A Georgia tax audit is typically triggered by red flags such as discrepancies in tax filings, underreported income, or irregularities related to sales tax and unemployment tax. If the state suspects unremitted taxes or unusual deductions, they may issue a Notice of Intent to Audit Books and Records.
What records will the Georgia auditor request?
Auditors often request financial documents such as sales records, payroll reports, tax returns, and accounting books. They may also demand records or signatures beyond what is legally required. It’s important to have a tax professional manage these requests to protect your rights.
Can a business owner face criminal charges from a Georgia tax audit?
Yes, especially in cases involving “trust fund taxes” like sales or unemployment taxes. If your business collects but fails to remit these taxes, the state may consider it theft, which can result in felony charges and potential jail time.
Should I handle the audit myself or hire a professional?
You should not represent yourself. Georgia auditors are trained to identify underpayments and may use aggressive tactics. Having an experienced tax professional ensures your rights are protected and prevents the audit from escalating unnecessarily.
Where should the audit be conducted?
It is advisable to avoid letting the audit occur at your business location. Instead, have the audit take place at your tax professional’s office. This helps control the scope and prevents the auditor from overreaching into unrelated areas of your operations.
