Tax debt issues are very difficult for all taxpayers, but these issues are magnified when it comes to a business tax debt. One of the biggest tax problems that businesses of any size can face is having a sales tax audit. Once notification of a sales tax audit is received, it causes a great deal of concern and disruption to the business. It is also a tax matter that is best dealt with the help of an experienced tax professional, such as a tax attorney, because of the monetary repercussions that can result from a tax audit.
The reason that it is more difficult for the small to medium businesses to handle their sales tax responsibilities is because they often do not have an accounting staff dedicated to the accounting function. This means that on top of all the other responsibilities of running a business, the owner has to fulfill the task of proper collection, record keeping and filing of the sales taxes. This leaves potential for error. These errors can result in a sales tax being owed that now creates even greater hardship on the owner. When a sales tax audit is going to be conducted you need to have the correct answers to questions that are going to arise. You need to be organized and have the time available to spend with the auditor. This is not easy when you are trying to operate a business, and audits can often be long and drawn out. A tax attorney will help review all of the documentation to determine if there is anything is out of order and could have created the cause of the audit. If something should surface, the tax attorney will know what the necessary steps are to rectify the situation and handle it for you.
For instance, we recently helped a small business owner who after an audit was assessed for $60,000 on estimated sales tax owed. We went through the details and used the actual sales data to come up with the correct number. After proving that our number was documented based on the sales tax data provided to the state, we were able to reduce the amount owed down to $8,000 by reviewing all the accounting records with the sales tax auditor.
Often overlooked, one thing that needs to be identified is the potential causes for the audit. If you have a business you want to be sure that you have identified the inherent problems so it will not resurface again. You want to know the potential causes for the underpayment of the sales tax so this issue will not continue to cause problems in the following years and future audits.