Backup for a specific period of time

I would only give them reports which cover the audit period. I would not give them my QB data file. To my knowledge, there is not a way to isolate a period to provide a QB data file for that period only. Even if you lock them out of a period older than the audit data, they still have access to everything more recent.

Don't give them your QB data. Give them a journal listing of all your in-state sales, by customer, for the period. If they insist, provide specific hard-copy invoices. It's not their concern what you sell outside of their jurisdiction.Here's a little known secret:

Sales tax auditors have an informal, sub-rosa, network. Suppose you're in Illinois. Your Illinois auditor notes you sold a bunch of stuff to a firm in, say, California. Your Illinois auditor passes the information to his California collegue, who then visits your client in California to collect "use" tax on stuff bought out-of-state.

Next week, the information flow is reversed and you get nailed.

Screw 'em. Make 'em work for their bonuses.

Your auditor will want to see the complete ledger, not just the sales account. When they audit they look at taxes we charge on sales. However, they also look at the exemptions we claim. They look at the sales taxes charged on purchases. They actually "find more" in the purchases than they do in the sales/revenues.

I have been through two sales tax audits here in Texas (last 3 yrs). After going through the general ledger they requested the invoices to back up certain postings. They found three violations (omissions) in the purchases.

1) The construction invoices were for a single amount. Neither the contract or the invoices showed the words "tax inclusive". So we had to pay sales tax to Texas.

2) The expense reports from the general manager had purchases made on the internet, with his credit card, from out of state that did not charge sales tax. Texas says if you don't pay the full 8.25% (Dallas jurisdiction is this amount) sales tax to another state in which you make a purchase, you owe them the difference of full 8.25% if not charged.

3) If we bought items from vendors within Texas, such as the other side of the Metroplex in Fort Worth that has a 7.75%, then we owe Texas the .5% difference.

One way or another the auditor said, ALL purchases except those for resale, are liable for the 8.25% sales tax that Dallas has. Local rate applies regardless of where the purchase is made.

I realize this is bey> j> > We need to provide data for a state sales tax audit.

My last California audit wasn't about the purchase side of the house at all. They only looked at the revenue side of the house. They had asked for three years of invoices and backup. Started with the most current quarter. They found a couple of very minor things in that quarter, a couple of use taxes that should have been charged for out of state sales, I don't think it amounted to $10. Auditor then said, basically you are charging what you are supposed to. Then spent a few minutes going over the couple things. Said we would get a letter telling us while we weren't 100% clean, there would be no changes required. Wasn't worth their time to go over the rest of it.

Boss was very happy. About eighteen months earlier I brought up that we should be charging tax on one thing which we hadn't been. We changed and started charging tax. If the auditor had started with the first of those quarters rather than the last ......

Speaking of that, this reminds me I need to make a change to the invoice form where I now work. "Title to masters pases to customer before first use by us."

I'll disagree. Purchases that go for the production of revenue are exempt; for example: tools, fertilizer, hootchi-kootchie girls. We develop software. All computers and parts necessary for the development of same, plus duplication equipment and media are similarily exempt. Point is, we don't resell our computers, but we do use them to develop something we do sell.

They have no claim to examine sales you make to out-of-state clients.

Colorado auditors uncovered a scam where high-end jewelry was shipped to Wyoming to avoid sales tax. I don't have all the facts, but I'm supposing the stuff was then sent back to local purchasers.

So, they do take a close look at sales claimed as exempt from sales tax for what ever reason.

They take a look at it only because the business permits them to do so.

There is nothing wrong with a "scam" to avoid taxes if the transaction is otherwise legal. Selling stuff to someone in Wyoming where it is, in turn, sold back to someone in Colorado is simply creative tax avoidance.

Years ago, before Texas allowed UPS to operate intrastate, a Texas fruitcake maker shipped truckloads of their product to Shreveport, Louisiana where it would be put into the UPS system for delivery in Texas. I believe that most of those 1970-era fruitcakes are still in circulation.

Same thing (well, almost).

I don't thing this was resold. I think it was just reshipped.

Right. But when merchandise leaves the state, the state no longer has any legitimate interest in the stuff.

I don't think that's totally true when a pattern of shipping to a common address for various different customers is uncovered. Smells bad and this resulted in an investigation of fraud and ultimate collection of lots of $$$.

My experience with auditors is that of the proof of exemption being on the seller. Prove it was shipped out of the state, provide a resale account number, provide an exempt organization qualifier.

They can look at them all they want to be sure they are in fact out of state sales.

Then the state can go suck eggs. Consolidated shipping to a legally qualified "customer" in another state is legal. What that "customer" does with the merchandise -- including re-shipping it back to the source state -- is beyond the oversight of the original state. If the two shippers (the original and the re-shipper) are legally distinct entities, such as separate corporations with the same stockholders, both states are screwed, legally, out of the sales tax.

What's your Bar number?

I haven't paid my Bar Association dues in over 30 years.

Why do you ask?

Wondering why you were giving legal advice, because this is clearly legal advice, not accounting advice. And you are sure this is valid no matter which pairs of the 50 states you pick? That none have perhaps enacted co-ownership rules that might require tax to be paid. Oh and how does this all impact income tax? Speaking of that, what would be up as far as the Sarbanes-Oxley Act if say the corporations in the two different states were both held by a shell that was publicly traded? Just some questions since you are dispensing legal advice.

Virtually all advice has legal ramifications. For example: "May I suggest fries with that?" can be construed as an "attractive nusiance."

Pretty sure. That one state legislature could enact laws binding on citizens of another state is pretty much intolerable (with the obvious exception of the "full faith and credit" clause pertaining to judicial decisions and laws of status).

State income tax? I don't know. The only cross-border income tax I know is New York taxing the retirement income of (now) citizens of Florida. (It's the classic "greedy bastards" vs. "tax evaders" conundrum.)

That's easy. Companies that use QB are, in the main, supremely indifferent to SOX (mainly because SOX governs the financial oversight of public companies).