Will Your Sales Tax Exemption Certificates Stand In The Audit?
You may have some very old large dusty files with your customer exemption certificates but the real question that businesses are now facing is whether or not their exemption certificates will stand in the state audit? Is the certificate on the correct form? Are they all filled out property? Are they all signed and dated? Are they still valid?
Many state auditors know that this is a weak spot of many businesses and audit of sales tax exemption certificate frequently leads to large sales tax assessment of the account and great revenue source for the states.
Exemptions Based on States
Each state has specific exemptions that apply for different types of purchases. Many exemptions are logical and transcend several states such as purchases that are made by the federal government. There are other purchases that may seem to be exempt, but are not. This includes some purchases made by a local or state agency or other organizations with exemptions. For example, in the state of California these organizations are not exempt from the state sales tax.
Making sure your Exemption Certificates will withstand an Audit
It is extremely important to research and understand which laws apply in the different states. This can be difficult for a small business that does not have a tax department. Understanding when a tax exemption certificate needs to be collected is very important. It is also important to know when to ask for and accept exemption certificates.
The slow economy has made many states increase the number of audits that they complete because they are attempting to ensure that businesses are in compliance with the laws as a way to generate income for the state. It is very important to have a plan in place in case your company is audited.
Professional Services
One of the best ways to make sure that your exemption certificates will withstand an audit is to hire a professional service for your tax needs. Small businesses that do not have an accounting service can benefit greatly from hiring a sales tax firm to complete their taxes and other financial forms.
Another option is to purchase exemption certificate management software. This software will help ensure that your business is in compliance with the new laws that are being put into place. The software also will be able to meet the needs of your company as it is growing.
Overall, the software option is great for many businesses, but there are some problems with it as well. The software may not stay current with the new laws and a company could still find that their exemption certificates are not in total compliance with the laws. Call Sales Tax Accountants today to review of your sales tax exemption needs and get Free initial assessment of the account at 404-855-7000.
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