This article answers common questions asked by people about state sales tax audits.

What is a state sales tax audit?

A state sales tax audit is a review of a taxpayer’s sales tax records to verify the accuracy of the sales tax collected and reported.

How does the state choose who to audit for sales tax?

The state may choose to audit a taxpayer for sales tax if there are discrepancies or inconsistencies in their sales tax records, or if the taxpayer’s sales tax liability falls outside the norm for their industry or location.

What happens during a state sales tax audit?

During a state sales tax audit, the auditor will review the taxpayer’s records and ask questions to verify the accuracy of the sales tax collected and reported. The auditor may request additional documentation to support the information reported.

Can I represent myself during a state sales tax audit?

A taxpayer has the right to represent themselves during a state sales tax audit, but it is generally recommended to seek the assistance of a tax professional or lawyer, as the audit process can be complex and technical.

Can I appeal the results of a state sales tax audit?

A taxpayer has the right to appeal the results of a state sales tax audit if they disagree with the findings. The appeal process varies by state and may involve a review by a higher-level state tax official or a hearing before the state tax court.

What are the consequences of failing a state sales tax audit?

The consequences of failing a state sales tax audit depend on the nature of the discrepancies or errors found in the taxpayer’s records. The taxpayer may be required to pay additional sales tax, interest, and penalties.

Can a state sales tax audit result in criminal charges?

In some cases, failing a state sales tax audit may result in criminal charges if the taxpayer is found to have intentionally provided false information or committed other tax fraud.

How long does a state sales tax audit take?

The length of a state sales tax audit can vary, but most audits are completed within a few months.

Can I be audited more than once for state sales tax?

A taxpayer can be audited more than once for state sales tax, but the likelihood of this occurring is relatively low.

Can the state audit my sales tax from previous years?

The state has the authority to audit a taxpayer’s sales tax records from previous years if it believes there were discrepancies or errors in the records.

What documents should I bring to a state sales tax audit?

A taxpayer should bring all relevant documentation to a state sales tax audit, including records of sales, purchases, and exemptions. It is also recommended to bring a copy of the sales tax return being audited and any supporting documentation.

Can the state audit my business for sales tax?

The state can audit a business’s sales tax records if it believes there are discrepancies or errors in the information reported.

Can the state audit my charitable donations for sales tax?

The state can audit a taxpayer’s charitable donations for sales tax if it believes the exemptions claimed on the tax return are not supported by appropriate documentation.

Can the state audit my investment income for sales tax?

The state can audit a taxpayer’s investment income for sales tax if it believes there are discrepancies or errors in the information reported.

Can the state audit my self-employed income for sales tax?

The state can audit a taxpayer’s self-employed income for sales tax if it believes there are discrepancies or errors in the information reported.

Can the state audit my retirement income for sales tax?

The state can audit a taxpayer’s retirement income for sales tax if it believes there are discrepancies or errors in the information reported.

Can the state audit my federal tax return for sales tax?

The state cannot audit a taxpayer’s federal tax return for sales tax, as the federal government and state governments have separate tax systems.

Can the state audit my sales tax return if I file jointly with my spouse?

The state can audit a taxpayer’s sales tax return if it is filed jointly with their spouse, even if only one spouse is being audited.

Can the state audit my sales tax return if I am self-employed?

The state can audit a sales tax return of a self-employed taxpayer if it believes there are discrepancies or errors in the information reported.

How can I reduce my risk of being audited for state sales tax?

To reduce the risk of being audited for state sales tax, it is important to accurately report all sales tax collected and claimed exemptions, keep thorough records of sales, purchases, and exemptions, and file and pay sales tax on time. It is also recommended to seek the assistance of a tax professional to ensure that the sales tax return is prepared accurately and in compliance with all tax laws.