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A sales tax audit is the state checking whether what you collected and reported matches what you actually owed, and how far back it reaches depends on the state. California generally goes back three years, and up to eight when no return was filed; Texas runs a four-year window. The periods you never filed are the ones that stay open longest. The instinct is to pull records together and reply, but the first response sets the frame for everything that follows. Get help before you answer.
The sampling and projection is the part that catches people. A handful of missing exemption certificates in a sample can become a large assessment once the rate is applied to years of sales.
We read the notice, gather your records, and find the weak spots before the state does, so nothing is volunteered that should not be.
We deal with the auditor, control what is produced and when, and push back on sampling methods or projections that overreach.
We work the proposed numbers down where the records support it, and set up the next step if the assessment still needs to be contested.
What the state can prove, and how it builds the sample, drives the result as much as whether you actually owe the tax. Both are shaped by how the audit is handled from day one.
The most common self-inflicted wound is an early, unguided response: handing over everything requested, agreeing to a sample period that is not representative, or explaining a position badly.
Once the sample is set and the projection runs, walking it back is far harder than shaping it correctly at the start. This is why representation matters most before the first reply, not after the assessment lands.
Cost depends on the size of the audit period, the volume of records, the number of issues in dispute, and whether the assessment has to be formally contested. We size it after reading the notice and seeing what the state is asking for.
If you are at that last point, it is not too late, but the work shifts from shaping the audit to contesting the result. A proposed assessment can become final on a fixed timeline, so the window to respond is not open-ended.
You do not need your records perfectly organized before you call; that is part of what we do. The sooner we are in, the more of the audit we can shape rather than just react to.
This page provides general information about sales tax audits and does not constitute tax, legal, or financial advice. How an audit unfolds depends on your own facts, records, and the states and periods involved, and no result can be promised in advance. Before responding to a notice or assessment, speak with a qualified Dimov Tax professional about your specific situation.
Get in touch about your audit notice and we will tell you what it actually means and what your first move should be. You can share the notice itself when we speak.
