How the audit usually works
New York sales tax audits commonly cover several years at once, and auditors frequently test a sample period and project the results across the full audit period. When records are incomplete, they may estimate sales using indirect methods, such as comparing purchases to typical markups or observing the business in operation. Those estimates can be challenged, but the strongest response is usually better records. Sales tax is collected on behalf of the state, so owners, officers, and some employees with responsibility can be held personally liable for unpaid amounts. Businesses selling into other states may also face audits there, since remote sellers can owe collection duties without a physical presence.
Records that change the result
Gather sales journals, point-of-sale reports, bank deposits, purchase invoices, and copies of filed sales tax returns for the period. Exemption and resale certificates are especially important: a sale treated as exempt without a valid certificate on file is often assessed as taxable. Whether certificates obtained after the fact will be accepted depends on rules worth checking early in the audit. If you agree to a sampling method or a test period, that agreement can drive the outcome, so ask before signing. Keep a log of what you give the auditor and when, with your representative's help.
After the auditor's findings
At the end of the audit you will usually see proposed findings and then, if not resolved, a formal notice of determination. New York offers a conciliation conference and a petition to the Division of Tax Appeals, both with strict deadlines that run from the date of the notice. Payment plans exist if part of the assessment is agreed. In a first conversation we review the audit scope and the method the auditor is using, look at personal liability questions for owners and officers, and decide which issues to contest before findings are finalized.
