Georgia Sales Tax Audit – Introduction and Overview
Up is down; down is up. He says “Hello” when he leaves, “Goodbye” when he arrives.
- Jerry Seinfeld
That is how most “lucky” businesses feel when they win the bizarre lottery of getting sales tax audit notice from Georgia. And, by winning, the lottery, we really mean being chosen by the state to go through the long, grueling and stressful process of a Georgia sales tax audit. However, by having the right team, the audit does not have to be as stressful and burdensome as you might think. While some companies may opt for a sales tax lawyer, having a team that is experienced and knows how to play the audit game is more critical than having an expensive tax attorney. We have both as part of our team and our goal is to provide the appropriate service for your business!
Sometimes getting lucky just means being unlucky. There is a percentage of companies that get randomly selected by Georgia for a sales tax audit. But…. That usually is not the case. More commonly companies get selected because:
- Targeted Industry – Georgia often will go after industries suspected of underreporting. Usually pegged as “campaigns” Georgia will have audits that are focused on a particular industry or industries.
- Cash-based businesses are of particular interest such as bars, restaurants, grocery, and liquor stores. It would “shock” you to know that cash-based businesses do not always report all of their cash sales for federal or state tax purposes. In the past, auditors had a difficult time auditing such industries but thanks to third party reporting and much better industry average data, Georgia is more effectively and efficiently able to audit such industries.
- Other industries that get targeted are ones with complex and confusing sales tax laws or rules. If even the best sales tax attorney, CPA or professional has a tough time understanding it, how do you think the average business owner fares? Industries with gotcha type rules are often prime candidates for audit notices.
- Prior audits – Typically a company that is audited and owes Georgia as a result, is likely to get hit again to see if they cleaned up their act
- Gross Sales – If your business has a high volume of sales or your sales reported to Georgia are different than your federally reported sales, it could be a sales tax audit flag
- Exempt sales – You’ve already paid tax on your taxable sales, so having a high volume of exempt sales can be a sales tax collection opportunity for Georgia
- Exempt Sales % – If your business reports a higher percentage of exempt sales compared to the industry averages, you could be up next for a Georgia sales tax audit.
- Refunds or Credits – The line on the Georgia sales and use tax return should be changed to “AUDIT ME.” Georgia businesses that take a higher number of credits on their return have a high likelihood of getting a Georgia sales tax audit. The same holds true for filing a refund claim for Georgia sales tax.
According to CDTFA in California, the following are top audit errors for 2017-18
State taxes, including sales and use tax, are a huge revenue source for states. The Federation of Tax Administrators published some state tax revenue statistics in 2017, including the amount of tax revenue by state:
A Georgia or other state sales tax audit puts the pressure on taxpayers in their guilty until proven innocent audit tactics. The auditors are taught when in doubt, write it up and make the taxpayer prove otherwise. Managing and controlling the audit so the auditor does not have the option to write it up can be a tactical advantage. However, if it is written up, you have to keep clawing away at the assessment through the appeals and protest process to reduce it.
Just as you are well versed in managing your business, our business is managing and fighting your audit for you. Whether you need a sales tax attorney or consultant, Sales Tax Helper matches the service to meet your needs. If you want to take on the audit yourself, without a sales tax lawyer or professional, our site has useful information to help you navigate through these treacherous waters.
Get a free 30-minute Consultation
We want to work with you! We would love to understand your problems, questions, and concerns. For that reason, we are offering our famous, free 30-minute consulting call where we get to know more about you and your business. Just click the link below and schedule your call.