What is a sales tax audit?
In general, sales tax returns are subject to audits in three-year intervals, at the time a permit is closed out, or in connection with an audit of another permit held by the taxpayer.
Audits can also be initiated as a result of information received from the outside sources.
In a sales and use tax audit, the auditor wants to determine the following about the returns you have filed:
Initial contact is usually by phone call from the auditor.If unable to reach you by phone, the auditor may write or visit your business location.
During the examination, if the auditor finds that your records indicate possible reporting errors, the auditor can utilize their many different audit methods such as mark-up method, sample basis audit, observation test at your business premises, and etc.
When the audit is complete, the auditor will arrange to hold an exit conference to discuss the audit findings.If you disagree with the audit findings, you will then given your appeal rights.
Under the California Revenue and Taxation Code, any person who evades the reporting, assessment or payment of sales taxes that would otherwise be due may be guilty of sales tax evasion.Violations can be subject to fines and/or jail time.