• Adding the total amount billed to customers.
• Subtracting the total sales and use tax paid, either electronically or by check, and account for any discounts a state may offer for filing on time.
• Reconciling this amount with the current balance of your clients’ sales tax payable account.
- Respond to notices. Failing to respond to notices in a timely manner can result in a levy against your clients’ bank account, a lien on their corporate officers or suspension of their business license. Notices can inform your clients of a number of things, including tax rate changes, changes in what is taxable or exempt, or an error in calculating or sending a return. In any case, not responding can only make the situation worse.
As states increase the pressure to collect unpaid taxes to help balance their budgets, your clients could face a sales tax audit. Taking the time to review and strengthen all the processes noted above will minimize the cost of an audit and possibly errors.