Key Takeaways
- So those are what I call the big five.
- Now for a lot of people, including companies that do a lot of actions, producing all the sales and purchase invoices, is quite a tall task.
- Again, the more information you give the auditor, the more avenues of attack that you expose yourself to.
What type of documentation will I need in my sales tax audit? So if you’ve gotten an audit notice and you’ve read the auditor’s document request, you’ll have a pretty good idea of what they’re requesting. The auditor is looking at two things. They’re looking at sales that you made, obviously, it’s a sales tax audit, and they’re looking at purchases to make sure that sales tax was properly paid and charged on those invoices. That could affect either you or to be looking at your 1099Ks in certain cases with
certain industries.
So those are what I call the big five. That’s the data that the auditor wants to see first because they want to make sure that all the big five data matches itself. The next thing they’re going to ask you for is they’re going to ask you for copies of your sales invoices and your purchase invoices for the
audit period.
Now for a lot of people, including companies that do a lot of actions, producing all the sales and purchase invoices, is quite a tall task. So one of the big things that you’re going to want to do is agree with the auditor on perhaps taking a sample for sales and purchases so you don’t have to dig out and organize three years of records. This is a huge
time saver.
And lastly, the auditor is going to ask for special items. These can include resale certificates. These can include exemptions. These can include other evidence that they might want to see, like the sales tax accrual account or any supplemental information. And so the key is, is in sitting down with the auditor and developing an audit plan, you can often streamline this document request down to something that’s much
more manageable.
Again, the more information you give the auditor, the more avenues of attack that you expose yourself to. So you want to make sure that you control things and that you’re presenting things in a clean and consistent manner. That’s the best way to get through the document part of a sales
tax audit.
Facing a California Sales Tax Audit?
CDTFA audits can result in significant assessments — especially if records are incomplete. The direction of the audit is largely set by how you respond to the initial document request. If you’re at any stage of a sales tax audit, a brief review can clarify what you’re facing.
Discuss My Sales Tax Audit → Or call: (619) 378-3138
