Texas Sales Tax Audit
Being notified and going through the procedure of a Texas sales tax audit can be a daunting proposition. The process begins with your receipt of Notice of Intent to Audit Books and Records, from the Texas Department of Revenue. The auditor will be looking for violations of Texas tax law and whether additional taxes, along with penalties and interest, can be assessed against you. You should understand from the start that a Comptroller auditor’s job is NOT to help you accurately determine your tax liabilities. THE AUDITOR’S JOB IS TO FIND ADDITIONAL TAXES DUE. It is that simple. If the auditor can call into question an entry or record, then the auditor will do so – and usually project that one record across the entire 3 year audit period exponentially increasing your proposed Texas tax assessment.
Particularly with a business, the COMPTROLLER will look for instances where your business has collected sales tax from customers but failed to remit all or part of these monies to the state. Collecting but not remitted Texas taxes (think Sales Tax or Unemployment Tax) is one of the worst possible things a business owner can do with regard to Texas taxes. If you consider penalties and interest to be painful, then you might be surprised to find out that collecting but not remitting Texas taxes can land a business owner in jail. Under Texas law, collecting but not remitting these “trust fund taxes” is considered stealing from the state and the business owner and employees can be charged with as high as a felony under certain circumstances.
Even if you feel you have been compliant, we strongly recommend that you do not represent yourself during as Texas tax audit. The Texas Department of Revenue auditors have many tricks up their sleeves that can limit your rights under Texas law. It is vital to have a knowledgeable and experienced tax professional to assist you through all stages of the audit, from the initial notice through to its conclusion.
Texas Sales Tax Audit
