Sales and Use Tax Audits: Internal Controls, Risk Assessment, Identifying Pitfalls, Effective Strategies

States generally have a system for selecting taxpayers for audit and will use various methods in doing so--such as sales volume, nexus, the complexity of tax returns or specific events, such as bankruptcy, or implementing an online sales platform. Audits may also follow a state's change in the law.

Given that we are three years removed from states' adoption of economic nexus thresholds, and many states have begun to impose tax on online and digital sales, we are seeing and can expect to see a rise in sales tax audits, as a means of enforcing compliance with these changes.

A sales and use tax examination can be time-consuming, expensive, and devastating to the business. It can result in large assessments for uncollected sales tax, under-accrued use tax, interest, and penalties.

Tax professionals and advisers must emphasize effective methods for handling state sales and use tax audits, and more importantly, in identifying and controlling sales and use tax risk post-tax reform.

Listen as our panel discusses effective methods in conducting internal audits to identify risks, determine sales and use tax applicability, handle state audit examinations, and provide insight into state tax assessment concerns after tax reform.

1. Identifying and controlling sales and use tax risks
2. Unanticipated sales and use tax exposure and effective due diligence
3. Conducting an effective internal sales and use tax audit
4. Maintaining deadlines, forms, letters, agreements, and transactions
5. Practical tactics for handling state audits and assessments

The panel will review these and other key issues:

• Performing a risk assessment to identify sales and use tax exposure
• Effective due diligence and reducing the impact of unanticipated sales and use tax issues
• Methods in conducting an internal sales and use tax audit
• Developing policies and procedures in maintaining deadlines, forms, agreements, and transactions

Learning Objectives

After completing this course, you will be able to:

• Recognize the risks associated with state sales and use tax audits
• Determine the necessary methods in conducting internal audits
• Identify state sales and use tax issues stemming from tax reform
• Establish procedures in handling the state audit process
• Determine methods in maintaining required deadlines, forms, agreements, and other necessary items for audits

• Field of Study: Taxes
• Level of Knowledge: Intermediate
• Advance Preparation: None
• Teaching Method: Seminar/Lecture
• Delivery Method: Group-Internet (via computer)
• Attendance Monitoring Method: Attendance is monitored electronically via a participant's PIN and through a series of attendance verification prompts displayed throughout the program
• Prerequisite: Three years plus business or public firm experience at mid-level within the organization, preparing complex tax forms and schedules, supervising other preparers/accountants. Specific knowledge and understanding of practical guidance for conducting corporate audits, knowing how to avoid the most common and costly risk areas in sales and use tax audits; familiarity with how to prevent or resolve audit deficiencies.

Strafford Publications, Inc. is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of Accountancy have final authority on the acceptance of individual courses for CPE Credits. Complaints regarding registered sponsons may be submitted to NASBA through its website: www.nasbaregistry.org.