South Dakota: Top 10 Errors Found During Audits
- Apr 10, 2014 | Gail Cole
Everyone makes mistakes.
Cicero said, “We must not say every mistake is a foolish one.” George Bernard Shaw links mistakes to honor, “A life spent making mistakes is not only more honorable, but more useful than a life spent doing nothing.” And for James Joyce, mistakes are a launch pad, “A man’s mistakes are his portals of discovery.”
Ideally, we learn from our mistakes—that’s why Cicero, Joyce, and countless others praise them. But is making a mistake enough to learn from it? If recognizing a mistake doesn't spark change, perhaps paying for it will. That’s undoubtedly the belief behind state audits, which slap penalties and fines on taxpayers when mistakes are unearthed.
- Under-reporting sales, use and/or excise tax due to poor record keeping.
- Not remitting use tax on goods and services purchased or used.
- Not remitting use tax on items taken from inventory and used for construction projects.
- Not remitting use tax on items taken from inventory for business or personal use.
- Not remitting use and/or excise tax on owner-furnished materials (OFM).
- Not remitting use tax on materials stored in state and taken out of state for construction projects.
- Not remitting use tax on equipment brought in from out-of-state.
- Exempting sales to taxable customers such as churches and 501(c)3 entities.
- Not having valid exemption certificates on file.
- Municipal tax and Municipal Gross Receipts Tax (MGRT) reporting errors.
Use tax wins! 6 of the top ten audit-found errors are related to use tax. Proper management of sales tax exemptions takes a distant second place.