Sales tax glossary
What is a sales tax audit?
A sales tax audit is a state's review of a business's records to confirm it collected, reported and remitted the right amount of sales and use tax. Auditors compare sales records, returns, exemption certificates and purchase records, and can assess unpaid tax, interest and penalties.
Example
An auditor samples one quarter of a business's invoices, finds exempt sales without certificates, and projects that error rate across the full audit period.
Why it matters for sellers
Audit findings often reach back several years. Complete records, especially exemption certificates and use tax on your own purchases, are the best protection.
Related terms
This definition is general information, not tax or legal advice. Rules vary by jurisdiction and change over time.
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