Minimizing the Penalty and Interest Costs of a Sales Tax Audit

|Minimizing the Penalty and Interest Costs of a Sales Tax Audit

Minimizing the Penalty and Interest Costs of a Sales Tax Audit

What is the financial burden that comes from the results of a sales tax audit? The implications vary depending on the size of your company, the findings from the audit, and the mistakes that might have been made in your sales tax calculations, collections, and payment. In the case where any issues are found, not only are you responsible for the amount that should have been paid, but you might also be facing additional costs for penalty and interest fees.

States are Increasing Audits to Boost Revenue

Many states across the country are looking for ways to boost revenue, which is why the risk of audits has increased in many departments. As a business owner, there are things that you can do to reduce the chances of being audited. But, there are still times when audits happen due to random selection.

Just because your company was chosen for the auditing process, doesn’t mean that you will need to pay a lot of money. Instead, you can be proactive right now to ensure compliance with your systems. It is important that you are careful with tax calculations and payments. Keeping good records is essential so that you can show documentation in case a sales tax audit is requested.

Managing Communication with the Auditor

Keep in mind that your contact with the auditor can impact the results of the audit. If you start on the wrong foot with a rough conversation, then it could put the auditor in a defensive position, resulting in a situation where they are more thorough in identifying problems with your sales tax filings and payments. On the other hand, respectful, cordial conversations can keep things friendly and set a good tone for the auditing process.

Even if you can talk to the auditor in a friendly manner, never assume that the auditor has your best interests in mind. The person works for the Florida Department of Revenue. So, it means that they are looking for ways to maximize the money received through taxes as well as penalty and interest fees.

Why Do You Need to Pay Penalty and Interest?

What are the reasons why penalty and interest fees might be added to your bill? Usually, these expenses are the result of mistakes that are made on your tax filing. If you failed to collect sales tax or there were issues with the way the taxes were calculated, then you might have a balance that is owed to the Department of Revenue.

But, the department won’t collect the difference and then be finished with the audit. Instead, the balance is owed, as well as interest costs, fees, and any other penalties that are applicable for delayed payments. Even though these costs are common, there are things that can be done to minimize the amount that you spend. An experienced sales tax team can oversee the auditing process and provide personal recommendations.

For more information about sales tax auditing services, contact the experts at Biz Tax Pros. We are here to help!

Legal Disclaimer: This article is for educational purposes only, it is not meant to give legal advice. All business situations are different, which is why it is best to consult with a professional team for personal recommendations. Please call us or schedule an appointment if you need assistance to with your sales tax questions or concerns.

By |2018-09-17T11:43:40+00:00July 6th, 2018|Taxes|Comments Off on Minimizing the Penalty and Interest Costs of a Sales Tax Audit