How are businesses selected for audit?
The Department of Revenue (Department) uses systematic methods and electronic data to evaluate and determine those taxpayers who are at potential risk for underreporting and/or underpaying sales, use, corporate, and/or withholding taxes.
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Reference Page: http://dor.mo.gov/faq/business/audit.php
How will I be notified that my business has been selected for audit?
A Department auditor contacts businesses either by phone and/or by letter. Once initial contact has been established, discussions will follow regarding audit periods, accounting records, sampling the accounting records, and where the audit will be conducted. These discussions may be by phone or during a face-to-face meeting.
The Field Compliance Bureau recognizes that many companies maintain their accounting records in electronic format. If any of the records can be provided electronically on compact disk or similar electronic media, the audit time at your business location can be substantially reduced. Furthermore, providing records in electronic format also reduces the risks associated with sampling and increases the accuracy of the audit.
Should I have a tax professional or attorney present at the audit?
It is not necessary for a tax professional or attorney to be present during an audit. In order for the auditor to discuss the audit with a third party, however, the Department of Revenue requires a signed power of attorney form.
How do I get a copy of the Sales/Use or Corporate Tax Regulations?
The Code of State Regulations is available for viewing at www.sos.mo.gov.
How long will the auditors be at my business location? Do the auditors have to come to my location to conduct the audit?
The length of time an auditor will be at your business depends on various factors, including, but not limited to, the size of the business, the industry type, and the condition and complexity of the accounting records.
On average, an auditor spends one week examining records for a sales/use tax audit of a medium-sized company. After examining the records, the auditor will allow you time to gather additional information, if necessary. Follow-up meetings will be scheduled to discuss the overall progress and preliminary conclusions of the audit.
Under most circumstances, an auditor spends one day examining records for a corporate tax audit. If a large corporation or multiple corporations are audited, the audit time may be extended.
Department of Revenue audits are normally conducted at your business site, although other options may be available. An audit may be conducted off-site using electronic data provided by you, the taxpayer, or at the location of a third party, such as your tax professional’s office.
How long should I keep my records for Missouri tax audit purposes?
Missouri sales and use tax laws Section 144.320, RSMo indicate that records should be kept for at least three years. The Department of Revenue recommends that records be retained for five years or as long as necessary to prove that a liability does not exist for periods under audit.
Corporate tax records should be retained in accordance with the same guidance provided above.
Cash Tax and Accounting