Department of Taxation and Finance
Sales Tax Audit Practices The Department of Taxation and Finance (Department) collects tax revenue and conducts audits of sales tax collected from businesses. During the 2009-2010 fiscal year, the Department completed over 37,500 sales tax audits, about 30 percent of which resulted in assessments totaling over $1 billion. We reviewed the Department's practices relating to the sales tax audits and found it had established policies and procedures for performing sales tax audits and for using alternate methods for estimating sales tax. We also found that staff had been trained in these policies and procedures, and appropriately used alternate audit methods only when necessary based on the availability of records and other circumstances of the cases. Alternative methods were used in 35 of the 51 audit cases we sampled, in each case only after the auditors had determined that business records were either unavailable or incomplete.
For a complete copy of Report 2010-S-33 click here.