Sales and Use Tax - Audits
Sales tax audits occur with relative frequency. It is not uncommon for a large company to be under a sales tax audit by several states at the same time. Auditors usually request large volumes of transaction data and vendor file access to complete audit field work. Effectively navigating the audit process is essential to successful, favorable results.
CTMI offers several sales tax audit services to our clients:
Reverse Audit / Overpayment Reviews
A Reverse Audit is a proactive exercise to identify and recover sales tax paid by our client’s on exempt transactions. With the burden on the seller to collect sales tax and the seller’s potential liability (tax, penalties and interest) associated with non-compliance, many vendors simply charge sales tax on most transactions whether or not the transaction qualifies as non-taxable.
CTMI consultants follow a refined approach to conducting sales tax overpayment reviews requiring only minimal internal resources to complete.
CTMI works closely with the state auditor throughout the audit. All audit findings are reviewed for merit with defensible positions presented by CTMI to ensure sales tax law is interpreted in the client’s favor. The audit process is lengthy, requiring in-depth knowledge of sales tax law and how it specifically applies to a client's operation. Often, CTMI will conduct a Reverse Audit for the audit period under review resulting in a reduction in any sales tax liability or an overall refund for our clients.
Many states have programs for companies to conduct a self-audit. The states provides guidelines to follow and in some cases, interest may be reduced and penalties waived by conducting a “Managed Audit.” CTMI is often engaged to represent clients during the managed audit process, providing our expertise to not only conduct the audit, but to identify overpayments and develop defensible positions where appropriate.