Quick Overview:
A sales tax audit is when your state's tax agency reviews your business’s sales tax records. It's routine and doesn't automatically mean there's an issue.
Why Might Your Business Be Audited? Common reasons include:
Random selection (routine checks)
Late or missing tax returns
Mistakes or changes in reporting
Industry-specific checks
Tips or external information
What Happens During an Audit? Here's the typical process:
Notice: The state notifies you via official letter or email.
Details: They specify the records needed and the period being audited.
Document Submission: You provide requested documents (sales reports, tax returns, etc.).
Review: The auditor examines your records and may ask questions.
Results: You get a report indicating findings.
Documents You'll Need: Most auditors request:
Filed sales tax returns and payment confirmations
Sales reports (clearly showing taxable and exempt sales)
Customer exemption/resale certificates
Invoices and receipts
Nexus evidence (proof of business presence)
Marketplace facilitator data (if applicable)
Shipping and fulfillment records
How Long Does an Audit Take?
Duration varies from weeks to months, depending on complexity. Well-organized documents speed up the process.
Possible Audit Outcomes:
✅ Clean Audit: No issues found.
⚠️ Underpayment: You owe additional taxes, penalties, or interest.
💰 Overpayment: You might receive a refund.
🔁 Follow-up Monitoring: The state may observe your future filings closely.
How Kintsugi Makes Audits Easier: Kintsugi helps you stay ready and compliant:
Centralized Data: All your sales and tax data in one accessible place.
Audit-Ready Reports: Easily download reports matching state requirements.
Exemption Certificate Tracking: Quickly manage and verify exemption certificates.
Easy Access Filing History: Retrieve past returns and payment confirmations instantly.
Expert Support: Assistance to find records or interpret filings during audits.
Tips for Year-Round Audit Readiness:
Regularly update and validate exemption certificates.
Consistently reconcile your sales and tax records.
File and pay sales taxes promptly.
Keep organized records for 3–5 years.
Monitor changes in nexus thresholds and registration requirements.
What to Do if Audited:
Carefully read the audit notice.
Inform your finance or tax team.
Collect requested documents (available through Kintsugi).
Reach out to Kintsugi Support for help accessing necessary reports.
Final Thoughts: Sales tax audits become stress-free with good practices and reliable tools like Kintsugi. Stay organized, compliant, and confident year-round.