Large corporations deal with sales tax audits regularly, though for many smaller business it’s an intimidating moment. However, like all business audits, it’s important to remember that a sales tax audit does not necessarily mean that you paid sales tax incorrectly. There are a variety of factors that can trigger a sales tax audit. Whether you are familiar with sales tax audits or this is your first time, we can help you resolve it quickly and painlessly.
Sales Tax Audits: Simple and Complex
Paying sales tax can get confusing very quickly. This is one of the more confusing aspects of owning a business, especially in today’s online world. If you sell goods or provide a service from one location, your sales tax payments are relatively straight-forward. In this case, simply keeping accurate sales records and sales tax payments can make an sales tax audit simple. However, if you sell goods or provide services in several states, or you conduct business online, sales tax is not always so straightforward.
Both large and small businesses are subject to sales tax audits. In many cases, smaller businesses, particularly sole proprietorships, may receive more audits. Regardless of the type of business you operate, it is important to get the right assistance to help you through a sales tax audit. Don’t let yourself be bullied into paying more than you should.
Connecticut Sales Tax
Most Connecticut residents know the sales tax rate is 6.35%. This means that 6.35% of every sale, whether you sells goods or provide a service or both, must be paid back to the state. Though the Connecticut sales tax rate is generally known, many residents may not know that certain items have different sales tax considerations. For example, some motor vehicle rentals are taxed at a rate of 9.35%. Certain high-priced luxury items like some jewelry and clothing items are taxed at a rate of 7.75%. Businesses are responsible for understanding these rates and paying them properly. If you’re not sure how to pay your Connecticut sales taxes or if you have been audited, contact us. We can help you understand and get through an audit with as little stress as possible.
Other State Sales Taxes
Most states, and many cities, impose different sales tax rates. Some states, like California, Indiana, Mississippi, New Jersey, Rhode Island, and Tennessee, have very high state sales tax rates. A few states, Alaska, Delaware, Montana, New Hampshire and Oregon, have no sales tax. Between these, many cities charge their own sales tax, which complicates the situation further. Furthermore, many states and cities charge special sales tax rates for certain items. If you sell goods or services in other states, especially if you have recently expanded, sales tax concerns can get complicated quickly. If you’re facing a sales tax audit and you do business in another state, we can help. Give us a call and we will help you sort out sales tax and work through your audit step by step.
Sales Tax Audit Triggers
Certain businesses are subject to more sales tax audits than others. If you have never been audited before, a recent change to your business may have triggered an audit. If you have been audited several times, your business activities may be continuously triggering audits.
The following factors can trigger an audit:
- You sell a high volume of goods
- Your sales have changed significantly in a short time
- You have previously paid sales tax late, or failed to pay
- Your business location previously closed or declared bankruptcy
- You sell a high volume of goods online
- You sell in multiple states
- A large portion of your sales tax is exempt
- Your returns have been adjusted in past
There are many other factors that might trigger an audit. This does not mean that you filed or paid sales taxes incorrectly. If you’ve been selected for a sales tax audit, work with business tax experts to make sure your sales taxes are in line. We will defend your business during the audit, and help you avoid future audits. We work with businesses across Connecticut and throughout the country. No matter what sales tax issues you are dealing with, contact us and we can help you solve the problem.