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Tips for a sales tax audit

On: May 8, 2020

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Sales tax audits are an unfortunate part of being a business owner in California that you can face for any number of reasons. Sometimes that reason is simply because you were the random taxpayer chosen to be audited or because you were flagged in their system. Either way, here are some helpful tips to keep you and your business safe and without any more fines during your sales tax audit. Hire a lawyer When you first receive a package that you have been selected for a sales tax audit, one of the first things you are going to want to do is to call some legal representation.  A tax lawyer will have been through this process many times and not only offer great advice on how you should proceed but can guide you through the process. Lawyers can also help you in the instance in which you do not have what the sales tax audit is looking or some of your documents or taxing methods have been done incorrectly.  The tax code is complicated, and while you should update yourself on any changes, a lawyer will know the ins and outs of the code and ensure that you do too when you hire them. A lawyer will also make sure that the auditor does not take advantage of you and makes sure that everything is done fairly and in an orderly fashion, which will help you out in the long run. Always make sure to call Leading Tax Group and don’t attempt to do it yourself. Update yourself As mentioned earlier, you should be updating yourself on all the changes to the tax code the come nearly every year to help avoid a sales tax audit. While there is no guarantee that the tax code will change year to year, it does change often, which as a business owner, you should be responsible for updating yourself on. Auditors are not your friends and will not cut you any slack if you have messed up and have chosen not to update yourself on any new rules or tax regulations that may apply to your business.  It is also a good time to update your record-keeping system and make sure that everything is thorough and up to the standards that are needed. Make sure that if you are a company that deals with other states that you are up to date on the other states’ sales tax codes as well, as each state differs. In California, the sales tax is 7.25 percent. This rate is made up of a 6 percent state sales tax rate and an additional 1.25 percent local rate. Sales tax in California handled by The California State Board of Equalization (BOE) who are the ones administering, collecting and enforcing the California tax code.  Regardless of if you are going to go through a sales tax audit now or in the future, it is always a good time to start fixing your methods and getting everything up to code now, rather than later.  Always make sure to call Leading Tax Group and don’t attempt to do it yourself.
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