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Michigan: Indirect Audit Procedure Sanctioned by Law


 Be prepared.

It’s important for businesses to keep accurate records of sales transactions and exemptions in Department of Treasury deems it necessary, the department may resort to an indirect audit procedure to determine the amount of sales tax owed.

As explained in a law enacted last spring:

“If the taxpayer fails to file a return or to maintain or preserve sufficient records as prescribed in this section, or the department has reason to believe that any records maintained or returns filed are inaccurate or incomplete and that additional taxes are due, the department may assess the amount of the tax due from the taxpayer based on an indirect audit procedure or any other information that is available or that may become available to the department.”

Disagree with the audit assessment? In Michigan as in other states, the burden of proof of refuting the assessment falls on your shoulders.

Audits happen, and if the law in Michigan is any indication, indirect audit procedures are becoming more commonplace. Relying on automated sales tax software makes audits less painful. Learn more.

photo credit: LendingMemo via photopin cc


Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.