Mock Audit

High Revenue Taxpayers

What are High Revenue Taxpayers?

High revenue taxpayers are taxpayers who remit over $10,000 a month in sales tax collections.

Special Audit Program

The Compliance Division of the Maryland Comptroller’s Office has a special audit program where a specified number of high revenue taxpayers are audited each year. Reason why? The littlest error in the sample period will generate an assessment in the tens of thousands or even in the hundreds of thousands of dollars plus interest and penalty.

Marsu’s Solution – Mock Audit

Marsu will perform a mock sales tax audit where it will select a set number of months in the current or past year to determine if there are any errors in the sales tax collection process that would result in an assessment for failure to collect sales tax.

Marsu Would Confirm the Following in the Sample Period

1. Sales tax is being collected on taxable sales
2. Sales tax is being collected on all components of a taxable sale
3. Verify that all resale, exemption or any other certificates or statements are valid
4. Billing methodology is not creating a sales tax issue
5. Should any information be changed or added to existing invoice format

Problems with Assuming Sales Tax Collection Procedures are Correct

1. Everybody assumes that the company is properly collecting sales tax. If the Company knew they were not collecting sales tax properly, then they would correct it
2. Change in personnel leads to past procedures not being followed completely
3. Change in business. Now providing taxable products or services that you were not providing before
4. Change in billing procedures or software packages
5. Accepted invalid resale, exemption or other certificates or statement

Non-High Revenue Taxpayers

Even if your company collects less than $10,000 a month, then you still should be concern if the company is properly collecting sales tax. If there are errors, then the company could still owe tens of thousands of dollars. A company who improperly collects sales tax does have the right to try to collect that tax from their customers, but seldom choose to do so. Bad customer relations. A lot of audits comes from other audits where The State sees your invoices for failure to collect and then authorizes an audit. If your invoices were seen with proper collection of sales tax, then your company may never be audited in the first place.

Contact Information

If you should have any questions about the mock audit program or desire a free consultation, then please contact Ken Dickard at 410-598-0955 or ken.dickard@comcast.net.