How to appeal a sales tax audit finding
- June 12, 2017 | Stephanie Faris
Sales tax audits are an unavoidable part of doing business. For large corporations, they can even become routine. However, when a government employee arrives at your front desk, stating it’s time for an audit, it can be difficult to see it as a routine situation. The process only becomes more stressful once you realize that the auditor has findings that could result in penalties.
There are certain steps you should take throughout the audit process to ensure your business is covered. Auditors are human, after all, and humans can make mistakes. Double-check all calculations and if you notice an error, don’t be afraid to point it out. In fact, your business has every right to appeal the finding and, if you have the right documentation to back up your claims, you may actually win.
Here are a few steps to take after an unsatisfactory audit.
Speak to the auditor
Your best opportunity to rectify an inaccurate audit finding is to simply mention it to the auditor during the meeting. If the auditor refuses to budge and you know you’re in the right, ask for contact information for that auditor’s supervisor. You may be able to schedule an in-person meeting or scan your documentation and email it over to resolve the situation.
Check your local laws
The fine details of the appeals process can vary from state to state, so it’s important to carefully check local laws as they apply to the area where your business is located. A thorough reading of those laws could also unearth information that will help with your appeal. Your state taxing authority should have information on your appeal options on its website. It’s important to act as quickly as possible following your audit, however, since many states have time limitations on filing an appeal. When you state your intentions to file an appeal, the tax authority should tell you what those time limits are and what steps you need to take.
The appeal process
Appeals are generally initiated through the completion of a form, either on the department’s website or by mail. Minnesota includes an Audit Appeal form with its audit report, streamlining the process for businesses. Many states, like Minnesota, also provides information on disputing incorrect information that was given to you by a state authority, as long as you have written proof. You may find that even after your appeal, the board doesn’t agree with you and upholds the original decision. In that case, you have a right to take additional steps, which can vary from state to state. In states like California, you can request an appearance before the board to discuss your case.
As stressful as a sales tax audit can be, when you monitor the process, you can protect your own interests while still being in compliance. If you find that there is an error, communicate calmly and professionally with the auditor and, in many cases, you’ll be able to rectify errors on site. Browse the tax guide for your state to ensure you know as much as possible about your rights and responsibilities and you’ll be prepared for any audit.