Vital Tips for A Successful Sales Tax Audit


Whether it is just a start-up or the business has been set up for more than years now, there comes a time when the department of revenue would knock at the door of the individual holding the business to review the books and even records to make sure the businesses are done in a right manner while following the tax and sales. The sales tax audit may happen anytime and that is why it is always better to be prepared for it so that there will not be any problem at the time when it happens. There are so many tax advisors who have even published the best practices to deal with such audits. Those who don’t have time to create a sales tax report can take expert help for sure.

Know about the pre-audit

If the individual has been just a small business owner or known only to deal with the tax or account issues for the small business, it is always better to know more about what exactly the business is selling when it comes to the rules of the sales tax. Often, individuals may think there can be exceptions, there are few aspects that can be taxable and it entirely depends on the jurisdiction. But if the individual offers the service along with the good sales, then the service can be a part of the tax base but also some can be exempted. The focus of such is to understand what exactly is being sold and whether it is understood by the state taxability rules in order to avoid any issues during the audit assessments.

Come up with an exemption certificate process

It is not necessary that every sale would qualify for the exception. Sometimes the application of the exemptions also depends on the buyer or the extreme use of the goods that are being sold. In order to support the exemption in such cases, a seller should get the right exemption completion certificate from the buyer.

It is also important to ensure the right attention to the detailing of the form is given so that if there is any trouble that is likely to come in future it can be avoided. If there has been an exemption of the sales depending on the recipient that already has the exemption certificates, then a process to store such certificates should be done. Besides, before any audit that shall be held, it is important to ensure the certificates are shown that are acceptable by the state.

Marketplace facilitator agreements reviewal

It is important to review and know any sales tax audit agreements that could have been with the marketplace facilitator to make sure the individual is reporting, gathering, and even paying on the sales using the right facilitator as and when needed. In the past few U.S supreme court ruling, there have been many states who have changed their respective rules with regards to the marketplace facilitators. It is important to ensure that the agreements of the Marketplace Facilitator are compliant with such tax changes.


Other than this an agreeable audit date should be stated and all the documents of the audit must be gathered around well. If all these steps are followed well, then in future there will not be much hassle with a sales tax audit.