A sales tax audit is kind of what it sounds like. The sales tax audit is the government coming in and checking to make sure that sales tax was paid properly. The biggest problem that we see in sales tax audits is that when you’re auditing a business’s sales, it’s not very reliable. Meaning yes, you can go through a business’s records over three years and audit every single transaction, but the problem with a lot of businesses, particularly lot of retail businesses, is cash and so even if you were to go through and audit everything, it doesn’t necessarily mean that the records are going to align with the way that the auditor thinks that they should. So you can have differences of opinion where the auditor can claim that there’s unreported cash sales or that there should have been additional tax charged and a variety of different issues and the problem with sales tax audits again is the size of them. You’re dealing with all of these transactions, you’re dealing with three years of individual transactions day in and day out.
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What Is the Direct Method of Testing in a Sales Tax Audit?
Brotman Law video has all the information you need to know to test during the direct method of the Sales tax audit.
What Is an Indirect Method of Testing in a Sales Tax Audit?
In a prior video we talked about the direct method of testing. The direct method of testing involves testing actual source documents, lining up and comparing them when you have a breakdown in the direct method. Then sales tax auditors will resort to what they call indirect methods. Indirect methods of testing is a fancy way of saying we’re going to play guessing games with statistics. So one of the indirect methods of testing is audit path sales. They look at current sales and they’ll do statistical comparisons between past sales and current sales. So one of the easiest ones they do is they do an observation test. They’ll send an auditor in a business for a couple of days to look at the sales that are being performed, whether the employees are ringing everything up correctly, whether they’re charging tax and then the auditor will sit there and literally record every single transaction and they’ll compare that against the POS system reports to see if there are any discrepancies. That’s called an observation test so if there is an error within that test, then they’ll do certain things based on
Tax Issues for Multi-State Businesses
Hi I’m Sam Brockman I am the founder and principal attorney at Brotman law here in San Diego. Today We’re going to be covering tax issues for multi-state businesses. I want to give you a little bit of a background on my background in order to better do some context to this presentation, so I am a tax controversy attorney here in San Diego which in plain English means I represent businesses and audits payroll tax sales tax and income tax and I help those who owe more money to the government than they can pay, so our firm does a variety of services but mostly we focus in on examinations and we focus in on collections work and in helping companies with compliance issues, so that they avoid those two issues increasingly a larger percentage of our business is with multi-state companies who are trying to stay out of trouble traditionally. We see a very large influx of businesses outside of California who tend to step into California tax issues, so I’m going to speak mostly from my cuts in the context of dealing with California tax issues but this applies to a variety of states California is one of the more aggressive states in pursuing businesses that are located outside of its borders for tax revenue California kind of smartened up to the fact that it can go after businesses and individuals that may have contact with the state of California, but who actually don’t reside in California and do don’t have voting power in California. So California has increased its base of operations and actually has offices in.
Are Tax Debt Relief Companies Legitimate?
To know if tax debt relief companies are genuine or legitimate. Brotman Law has given all the information you need.
How Does IRS Tax Debt Affect Your Passport and Your Ability to Travel or Live Overseas?
The IRS can report you to the State Department and the State Department can essentially revoke your passport.
How Can You Protect a New Startup Business From Personal Tax Debt?
Brotman Law has given all the informations you need to know to protect a new start-up business from all the personal tax debts
What Is the Difference Between a Tax Attorney and a CPA?
So we get asked this question a lot and a lot of taxpayers struggle in understanding what I do versus what a CPA does. In our firm we have tax attorneys who are both. We have tax attorneys who are attorneys and they are CPAs as well. Just to highlight why somebody would do that I want to draw the distinctions between what a CPA is and what a tax attorney is. So let’s start with a CPA. CPA stands for certified public accountant and what a certified public accountant is by definition is they’re somebody who is certified to provide financial statements and to the public that is what the term CPA stands for. When you go to accountant school and when you go through the process of getting your CPA license, the focus of your CPA license is naturally on reporting and preparing financial statements. It’s taking information, translating it to a financial statement and having the public have confidence in that statement. So within that process the focus is really on compliance. Accountants make sure that things are filled out and that they’re compliant so that’s why you go to an accountant to prepare your taxes every year. The accountant is charged with taking your information, putting it on a tax return, making sure that tax return is accurate and turning it in and that’s the basic function of what an accountant does. On the other side of things attorneys are focused on advocacy. When we go to law school, we learn about the law. We learn about how to argue, then learn about how to apply facts along and so there’s more of a back-and-forth with an attorney then there is in a compliance setting. With compliance, you are just focused on getting the right answer. On the advocacy side, oftentimes there’s not always a right answer so the two schools of thought are different between compliance and advocacy. Now that’s not to say that CPAs don’t advocate for their clients, although it’s a very rare characteristic.
What Is an Offer in Compromise?
The government is willing to forgive past tax liabilities is because where I’m a policy perspective.
How Does the Government Evaluate Offers in Compromise?
That’s a good question. So the government evaluates offers in compromises based on what a taxpayers reasonable collection potential is. Remember an offer in compromise is an agreement between the taxpayer and the government to forgive a past tax liability in exchange for future compliance. The government isn’t likely to forget about the liability. The government wants to make sure that the offer it’s getting from the taxpayer is fair to the government, so the government uses a formula called reasonable collection potential to determine that formula. The way reasonable collection potential works is the government looks at the taxpayer’s current situation, it projects a period of time between the state and federal government. They do it slightly differently but the question essentially is okay John’s taxpayer is submitting an offer in compromise: how much could we reasonably collect from John over the next five years and is that amount equal or lower than what John is offering? So you see how it works. They’re taking a five-year period, they’re saying how much can we get out of this guy and that amount is equal to or less than the amount of the offer. Then the government is inclined to take the offer so reasonable collection potential breaks down like this.