Sales Tax Audit

[Barbara Cashman]

Well, I guess it had to happen sometime. I am being audited by the NC Dept of Revenue for Sales and Use Tax (or whatever reason they choose to give me). Some of the things they are asking me for really set my thinking cap on high alert. The main thing I started to double-check was my file on Resale Certificates from those I sell to in NC. Even tho I had the number in Quickbooks, I had to ask for actual certificates for those accounts in NC that I could not find. Records for the last 3 years, including NC customers, Purchase records, Chart of Accounts, Employee records, Depreciation Schedules and Tax Returns (NC & Fed) for the last 3 years, and supporting data as to how I got the figures. Like most of you, I wear all the hats here and although I am so tight on listing all my retail and resale sales--and filing every penny of tax collected, Quickbooks never let me compile the info I needed in the form I needed to file correctly...so I always did every month manually. Now I have to reconstruct how I did it. In doing so, I have already come across some errors--minor tho they may be--errors, none the less. I'm so dadburned honest, I sometimes think that I will simply get myself in trouble trying to correct the errors. I am happy to pay the missed Sales Tax (amounting to less than $5 so far), but I don't want to raise red flags when unnecessary. Anyone else been in this situation that can lend some help in completing this mission honestly, efficiently and equitably? - Barbara

[Dani]

Just give them the records they asked for and let them weed through the stuff. Don't offer any more than you have to. If they have questions, they'll ask during the audit and you can explain then. If there's an error they point out, just say oopsie. After all, it's an awful lot of paperwork you're required to keep for free. I always like to remember that they work for me... not the other way around. I have decent records, too, so don't worry about these things. Of course, all those years in tax accounting probably gave me skin like an alligator when it comes to revenoooo agents.

[Suzan]

My brother was audited once, and when they asked e.g. for him to resubmit certain forms, which he had already submitted, he told the auditor "No, I've submitted these forms, you go and look for them!".

Being from Canada, tax rules are different, of course, but I think we assume these auditors have the power of God, which they don't. Just something to keep in mind. Don't let this auditor intimidate you, even if you have made some minor errors.

Cheers,
Suzan

[rosanna gusler]

one thought, record all your meetings. digital or tape recording. that puts an end to any "he said/she said" problems. perfectly legal if not on the phone. no need to notify anyone in advance. just in case you get one of those pyscho tax people. been there done that. rosanna