You would be hard pressed to find an organization that looks forward to sales and use tax audits. While the entire process can be a headache for the companies involved, there are a number of issues that particularly cause headaches for recipients.

An article published in Sales and Use Tax Monitor features interviews with organizations that have recently received sales and use tax audits. Each recipient describes a particular pain point they faced during their audit.

For example, a Florida organization that has undergone audits from several states says that the biggest problem they face is state governments wanting to review not just sales information, but also sales contracts.

According to the company’s sales and use tax supervisor, the states’ goal is to make sure organizations are paying sales tax on certain services. While sales tax is not typically due on services, it is due when the service is purchased alongside a taxable product. Many companies are invoiced separately for the products and services, which gives them the opportunity to incorrectly only pay the tax on the product.

The result is that organizations now have to dig deeper into their records to present auditors with their sales contracts in addition to invoices.

Other pain points highlighted in the article include the overall increased aggressiveness of state auditors and their refusal to settle issues during in audit. Rather than addressing an issue when it’s found, states are more interested in assessing the damage during the audit and settling issues later.

Click here for the full article.