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Texas sales tax audits: the importance of recordkeeping

Collecting sales tax from customers and making sales tax payments to the government can be a logistical challenge for many businesses. This is particularly true of small businesses, which do not always have the accounting personnel and other staff to handle sales taxes easily.

The risk, of course, is that state revenue authorities will initiate a sales tax audit. And that if they find something amiss, the result could be tax penalties or other consequences.

Recently, Texas revenue authorities launched such an audit against a company that sells Bible-study resources to pastors and scholars. The tools are multi-lingual and are designed to be installed on personal computers and mobile electronic devices.

The company that is the subject of the audit is called Logos Bible Software. It based in Bellingham, Washington. But Texas is a big state, with a large market for Bible resources.

The company's chief financial officer says he is not overly concerned about the Texas sales tax audit. This is because the company uses an accounting system that produces detailed and accurate reports each month.

For companies that have not kept good records, however, a sales tax audit can be a real challenge. Of course, just because you're being audited doesn't mean the government is right. Dealing with the audit is still a hassle, though, even if you win the case.

As the national economy picks up, many businesses will see their sales go up. That means more and more sales tax will need to be collected, both in Texas and elsewhere across the country.

Source: "Small Firms Benefit by Outsourcing Mundane Tasks," CIO Today, Byron Acohido, 11-24-12

Our firm handles situations similar to those discussed in this post. To learn more about our practice, please visit our Texas sales tax page.

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