Sales Tax Audits and Planning
Every business that has or could have taxable sales should have expert tax advice before they start doing business, or failing that as soon as possible thereafter. Most businesses know what’s taxable and what’s not most of the time, but small systemic errors can accumulate large liabilities. Many businesses are confused about how to treat sales across jurisdictions, and these types of sales are more and more common. Smart businesses don&rsquo t rely on peer advice or casual professional advice to get their sales taxes right. They provide all of the facts to their own counsel and get careful advice. If you can show that you gave your counsel all the facts and followed his advice in good faith, you cannot be convicted of a crime.
Sales tax audits usually involve complete disclosure of the last 6 years of your business records to a state examiner. Sales tax exams can result in significant assessments and, less often, in criminal referral and prosecution by the local District Attorney. Sales tax liabilities that cannot be paid by the business will be assessed against one or more responsible persons and cannot be discharged in bankruptcy.
Regardless of the state of your business records or your honesty in reporting sales tax liabilities, it’s important to have your attorney work closely with any sales tax examiner for the entire duration of the exam. That is the best way to assure that your exam is conducted fairly, and that errors by the examiner are identified and addressed.
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