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My business has been selected for a sales and use tax audit. What are potential tax risks and opportunities I should know about?
Posted in Tax and Finance

In the latest Louisville Business First Legal Forum Column, BGD partner Mark A. Loyd discussed potential risks and opportunities associated with a sales and use tax audit. Read his advice below and don’t miss our monthly legal forum column in Louisville Business First.

Topic
My business has been selected for a sales and use tax audit. What are potential tax risks and opportunities I should know about?

Advice
In a sales and use tax audit, an auditor reviews business records to determine whether the business has paid the appropriate amount of tax. Business owners should seek to manage potential risks and take advantage of available opportunities.

Preparation helps manage risks. Consider the implications of extending the statute of limitations and ensure that it also applies to refunds. Assemble and review requested records before the audit starts.  For example, keep properly completed resale and exemption certificates on file; missing, invalid or incomplete certificates can result in big assessments. Auditors often use samples; so, in designing the sample, think about how supporting records can be readily located and pulled.

Secure opportunities. Review potentially applicable exemptions and credits. Perform a reverse audit to identify refund opportunities. Identify potential avenues to resolution such as amnesty, voluntary disclosure or a negotiated settlement. An attorney can help manage and resolve the audit and potential refunds.


To learn more about Mark A. Loyd and his practice, please visit his profile.

To view the latest Legal Form Column, please click here.

  • Partner

    As a Partner and Chair of the Firm’s Tax and Employee Benefits Department, Mark’s practice focuses on resolving clients’ state, local and federal tax issues through planning, audit management, administrative protest ...

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