There are several situations that may cause overpayments of sales and use taxes. For example, in many states, field auditors have become more aggressive about assessing taxes, penalties and interest — which, in turn, has caused retailers and suppliers to be aggressive about
charging sales tax to avoid audit deficiencies.
In some cases, sales tax may be charged even when a sale is exempt. Or the tax may have been inappropriately charged because no exemption claim was made or an invalid exemption certificate was submitted. Either way, the purchaser ends up paying tax that was not legally due.
To make matters worse, many organizations operate across state lines, which multiplies their tax compliance responsibilities. Your company may have internal compliance controls, but they may not be able to keep up with the changing landscape due employee turnover, expansion, or other factors.
To remedy these shortcomings, your company could benefit from a “reverse sales and use tax audit.” Don’t confuse this with the audits performed by state revenue auditors looking to see if sales or use taxes were underpaid. In a “reverse audit,” a tax professional looks to identify and recover tax overpayments.
Contact our firm for information about conducting a “reverse audit.” We can take a comprehensive look at your organization’s activities and transactions. We look for refund opportunities, identify weaknesses in your sales and use tax compliance system, and offer recommendations on how to improve it.