- State tax authorities are increasingly using data from multiple tax filings (not just sales tax returns) to identify potential sales and use tax audit risks.
- Cross-tax data comparisons can reveal discrepancies, such as unreported revenue or mismatches between reported revenue and taxable sales, triggering audits or inquiries.
- Common audit triggers include reporting in-state revenue without sales tax registration, large gaps between revenue and taxable sales, and operational details indicating sales tax nexus.
- Enhanced data analytics and routine cross-tax data matching are leading to more targeted and frequent audits.
- Businesses should ensure consistency across all tax filings to minimize audit risk and exposure.
Source: thompsontax.com
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
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