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Which Division Conducts State Sales Tax Audits?
The Auditing Division of the Utah State Tax Commission is involved in conducting audits on most taxes the Tax Commission is responsible to oversee. Two of the main audits are income tax audits and sales tax audits. The Utah State Tax Commission is increasing the amounts it conducts, and these audits can be complex.
Sales Tax Audit
Sales tax is one of the largest revenue sources for the state. Sales tax auditors spend a majority of their time at taxpayers’ offices looking at detailed sales and purchase transactions to verify that the proper amount of tax has been remitted to the state. Taxpayers range from large corporations to small sole proprietorships.
What Happens During a State Tax Audit?
An audit begins with an opening conference. The opening conference is a meeting between the taxpayer and one or more representatives from the Auditing Division. The taxpayer should have his or her attorney present for the conference. During the conference, the scope of the audit will be explained, including which types of taxes will be examined, which time periods will be covered, and which types of records will be reviewed during the audit. In addition, auditors may request a tour of the taxpayer’s facilities. If a tour of the business is requested, the tax attorney should be present during the tour.
At any time during the audit process, the taxpayer may speak to the auditor about any questions or concerns they may have. The taxpayer may also request a meeting with the auditor’s manager to help resolve any disputes.
A Preliminary Notice is a letter from the Auditing Division that describes the findings of the audit and may contain a tax assessment if the audit discovered an underpayment of tax.
This notice is not a final assessment. The taxpayer has 25 days in which to review the findings and discuss them informally with the Auditing Division. If the taxpayer needs more than the 25 days allowed to review the findings with the Division, the taxpayer may request an extension of time. If the taxpayer agrees with the adjustments proposed in the Preliminary Notice, the taxpayer has the option of paying the tax assessment during this phase of the notice process and thereby stopping the accrual of interest.
Following the 25 days, if an extension of time has not been granted, a Statutory Notice will be issued. The Statutory Notice is a legal and binding assessment of the tax liability.
If the taxpayer does not agree with the adjustments proposed in the Statutory Notice may submit a written appeal within 30 days. If no appeal is filed, the Statutory Notice becomes a final assessment and full payment is due.
Can I Handle An Audit On My Own or Do I Need An Attorney?
You have every right to be represented during an audit. Auditors are accustomed to working with taxpayer representatives. If you believe there may be significant issues that could result in a substantial tax liability, it may be wise to consult with an experienced and knowledgeable tax attorney. This is especially true if you know you filed an inaccurate return. Even if you think you know what the areas of concern might be, an experienced tax attorney can look at your return and tell you what items or schedules are likely to draw the examining agent’s attention. This may help you prepare, and it will also help you decide whether you want and need to continue with representation throughout the audit process.
Free Consultation with a Tax Lawyer
If you are here, you probably have a tax law issue you need help with, call Ascent Law for your free tax law consultation (801) 676-5506. We want to help you.
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States
Telephone: (801) 676-5506