Common Errors Found in Audits

Common Sales Tax Errors

  1. Under-reporting of sales tax due to poor record keeping.
  2. Exempting sales to taxable customers such as churches and 501(c)3 entities.
  3. Municipal tax and Municipal Gross Receipts Tax (MGRT) reporting errors.
  4. Not having valid exemption certificates on file.
  5. Sales tax charged on construction services subject to excise tax.

Common Use Tax Errors

  1. Not remitting use tax on goods and services purchased/used.
  2. Not remitting use tax on items taken from inventory and used personally or in your business.
  3. Not remitting use tax on owner-furnished materials (OFM).
  4. Not remitting use tax on equipment brought in from out of state.
  5. Use tax paid in error on purchases of services subject to excise tax. 

Common Excise Tax Errors

  1. Under-reporting of excise tax due to poor record keeping.
  2. Not remitting excise tax on owner-furnished materials (OFM).
  3. Not reporting excise tax on work performed for Local, State or Federal Gov’t agencies.
  4. Excise tax charged on construction services subject to sales tax.
  5. Not including the excise tax invoiced and collected in reported gross receipts.

Common Fuel Tax Errors

  1. Errors in reporting due to poor record keeping.
  2. Not keeping the nine required items on trip sheets. (IFTA/IRP)
  3. Not using bill of lading as main source document. (Ex. should not substitute invoice, etc.) (Supplier)
  4. Not including non-taxable exports on returns. (Importer/Exporter/Supplier)
  5. Incorrect reporting of product authorizations – a product authorization must occur before the rack and bill of lading must reflect the new supplier.

 

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