How to Respond to a Sales Tax Audit Notification

Receiving a sales tax audit notification can feel overwhelming, especially if your business operates across multiple states or handles a high volume of transactions. But don’t panic—being proactive, organized, and well-informed is key to managing a sales tax audit successfully.

Whether you're a growing e-commerce store or a service-based company, understanding how to respond to an audit notice is essential to avoid penalties, interest, and reputational damage.

In this article, we'll guide you through the steps to take when you receive an audit notice and explain how Manage My Sales Tax can support you through the process.

What Triggers a Sales Tax Audit?

Sales tax audits don’t happen randomly. States usually initiate audits based on a few common red flags:

• Late or inconsistent sales tax filings

• Large discrepancies in reported sales

• Excessive exemption claims

• Tip-offs from customers or competitors

• Randomized state compliance initiatives

Step-by-Step: How to Respond to a Sales Tax Audit Notification

1. Stay Calm and Read the Notice Carefully

The audit notification will include:

• The audit period being reviewed

• Required documentation

• Deadlines for response

• Contact information for the assigned auditor

Tip: Make note of all deadlines and begin gathering requested documents immediately.

2. Contact the Auditor (or Let Your Consultant Do It)

You don’t have to go through this alone. It’s highly advisable to have a tax expert or representative manage communication with the auditor. If you choose to respond yourself:

• Be professional and polite

• Ask for clarification if needed

• Confirm what formats they prefer for documentation

3. Review Your Records Before Sharing

Before submitting any documents, perform your own internal audit to identify:

• Missing records or discrepancies

• Uncollected taxes

• Unfiled returns

This allows you to fix potential issues or prepare a defense for your position.

4. Gather and Organize Required Documentation

Typical documents include:

• Sales reports by state and month

• Sales tax returns and payment confirmations

• Exemption certificates (if applicable)

• General ledgers

• Purchase invoices

Pro Tip: Provide digital files in clear folders (e.g., "Sales 2023 – TX") to show professionalism and cooperation.

5. Respond Promptly and Professionally

Meet all deadlines, and keep a paper trail of every communication. If additional time is needed, request it in writing and explain why.

6. Correct Errors Proactively

If you identify errors in previous filings, it's better to correct them proactively. Some states offer reduced penalties for voluntary disclosure.

7. Prepare for an On-Site or Remote Audit

Auditors may request on-site visits or remote access to your accounting software. Ensure your systems are clean, organized, and accessible.

8. Understand Your Rights and Appeal Options

After the audit, you'll receive a preliminary assessment. If you disagree:

• Request a conference

• Submit additional documents

• File a formal appeal within the specified timeframe

How Manage My Sales Tax Supports You During an Audit

At Manage My Sales Tax, we help businesses prepare for and navigate sales tax audits with confidence and clarity.

Here’s how we support you every step of the way:

• Pre-Audit Review & Documentation Prep

  We help you review and organize your records, identifying any red flags before the auditor does.

• Exemption Certificate Management

  We ensure all your exemption certificates are accurate, complete, and properly stored.

• Accurate Sales Reconciliation

  We reconcile your sales and tax collected with filed returns to identify inconsistencies early.

• Auditor Communication & Representation

  We handle communication with auditors and represent your business to ensure clarity and compliance.

• Filing Corrections & Voluntary Disclosures

  We guide you through correcting past returns and filing voluntary disclosures when needed.

• Post-Audit Assistance

  We help you understand the results and manage appeals or payment arrangements, if applicable.

  
  

Don’t Face a Sales Tax Audit Alone

Whether you're preparing for a scheduled audit or dealing with an unexpected notice, expert support makes a difference. Avoid stress, reduce risk, and protect your business.

📌 Let’s get ahead of the audit—visit www.managemysalestax.com

Our experienced team is ready to help you manage the process with confidence and ease.

Book your FREE consultation today—let’s get started!

👉 https://lisajonescpa.youcanbook.me/