Home › Sales Tax Audit Notice
You Received a Sales Tax Audit Notice — What to Do First
A sales tax audit notice is unsettling, but the worst thing you can do is react on instinct. What you do in the first days — before you speak to the auditor — can shape the entire matter.
Read the Notice. Don’t Call the Auditor Yet.
The notice tells you which entity is auditing you, which tax and periods are at issue, and what is being requested. Read it carefully before you respond. A phone call to the auditor made in a panic can volunteer information you were not required to provide and cannot take back.
Know Your Deadline
Audit notices carry response deadlines, often measured in weeks, not months. Missing one can forfeit rights or trigger an estimated assessment. Calendar the deadline the day you receive the notice.
When an Audit Is Really a Sales-Suppression Investigation
Not every sales tax audit is routine. When an auditor focuses on your point-of-sale system, asks for Z-tapes, register journals, or POS export files, or compares your cash-to-credit ratio against your suppliers’ invoices, the audit may be probing for automated sales suppression. These audits can carry criminal exposure that an ordinary assessment does not. Recognizing that early changes how you should respond. Learn how auditors detect sales suppression.
What to Provide — and What Not to Volunteer
You must respond to legitimate records requests, but you are not obligated to narrate, speculate, or hand over more than is asked. The line between cooperation and self-incrimination is not always obvious, particularly where suppression is suspected.
Your CPA vs. a Tax Attorney
Your accountant may be the right person for a routine assessment. But your communications with a CPA are not protected the way communications with an attorney are, and if there is any prospect of a fraud or suppression allegation, that distinction matters a great deal. Where criminal exposure is possible, involve a tax attorney before responding.
Facing a sales suppression assessment, an audit, or a criminal inquiry? Our team pairs tax attorneys with the forensic specialists who wrote the book on detecting these cases. Email [email protected] and tell us what you received.
This page is general information, not legal advice, and does not create an attorney–client relationship. See our full disclaimer.