Georgia Sales Tax Audit Readiness Checklist
Georgia sales tax compliance represents a core filing requirement for businesses that sell taxable goods or services within the state. The Georgia DOR uses sales tax returns and payment records to verify that the correct amount of tax is collected and remitted.
When the department identifies potential discrepancies—such as unreported sales, underreported tax liability, or missing filings—it may initiate a Georgia sales tax audit to examine your business records and tax history. Being audited is a routine administrative process, but it requires careful attention to documentation and deadlines.
Understanding what an audit entails and how to prepare your records can help reduce stress and ensure accurate responses to the department. Ignoring audit notices or failing to comply with information requests can result in penalties, interest charges, and collection actions that escalate over time.
What a Sales Tax Audit Means
A Georgia sales tax audit is a formal examination of your business records conducted by the
Georgia DOR to verify that sales tax was correctly calculated, collected, and reported. An audit notice typically identifies the tax periods under review, the types of records the department will examine, and the contact information for the assigned auditor.
Why the State Initiates Audits
The Georgia DOR initiates sales tax audits based on several common triggers, including discrepancies between reported sales and financial records filed with other agencies. These also include unusual gaps or patterns in filing history, complaints, or third-party reports, or selection as part of the state’s random audit program.
Consequences of Ignoring an Audit Notice
Failing to respond to an assessment notice or refusing to provide requested records will escalate the matter. The Department of Revenue may issue formal findings based on available information, which could include estimated tax assessments, penalties, and interest charges.
If no response is received within the department's specified timeframe, the audit may proceed without your input or documentation, potentially resulting in unfavorable determinations. Unpaid assessments can lead to state tax debt and collection actions, including state tax executions on business assets, seizure of funds, or other enforcement measures.
What an Audit Notice Does Not Mean
Receiving an audit notice does not mean the Department of Revenue has determined that you owe additional tax. An audit is an investigation, not a final assessment, and does not automatically trigger penalties or collection actions.
Steps to Take After Receiving an Audit Notice
Initial Review
1. Read the audit notice completely and identify the tax periods being reviewed, the types of records requested, the auditor’s name and contact information, and all specified deadlines.
2. Note the response deadline and mark the date by which you must respond or provide records.
3. Contact the assigned auditor immediately if the deadline is unclear.
Document Preparation
4. Gather all requested documents, including sales records, invoices, receipts, tax returns, bank statements, accounting ledgers, and any other materials the department specifically identified.
5. Organize records by tax period and arrange documents in chronological order and by category to make the auditor’s review clear and efficient.
6. Review your tax returns and compare what was reported with your actual business records to identify any discrepancies before submitting materials.
7. Document the source of each record and prepare a summary explaining where each document came from and how it supports your tax filings.
Submission Process
8. Identify any missing or unavailable records and prepare a written explanation of why they are unavailable and what alternative documentation is available instead.
9. Submit records according to instructions and follow the department’s specified method for submission.
10. Keep a copy of everything you submit and maintain a complete file of all materials you provided and the dates they were submitted.
What Happens After Records Are Submitted
Once the Department of Revenue receives your records and documentation, the auditor will examine them to verify the accuracy of your tax filings through the assessment process. The examination process typically takes six to eighteen months, depending on the complexity of your business and the number of years being audited.
After the auditor completes the review, the department issues a Notice of Proposed Assessment if additional tax is found to be due. You have 45 days from the date printed on the Notice of
Proposed Assessment to file a protest with the Georgia Department of Revenue.
Common Mistakes to Avoid
- Missing the response deadline or responding late can result in the audit proceeding
without your input.
- Providing incomplete records forces the auditor to request additional materials and
delays the process.
- Failing to keep copies makes it difficult to verify what the department received or to
prepare for follow-up audits.
- Not organizing materials clearly makes the auditor’s job harder and increases the risk of
misinterpretation.
- Ignoring follow-up requests after the initial submission prevents resolution and
demonstrates a lack of cooperation.
- Assuming the audit is resolved before receiving a formal notice stating the audit is closed
means the examination is still ongoing.
Appeal Rights and Deadlines
If you disagree with the findings in a Notice of Proposed Assessment, you have 45 days from the date printed on the notice to file a protest with the Department of Revenue. Protests can be submitted online through the Georgia Tax Center or by mail using Form TSD-1.
Following a protest denial, the department will issue an Official Assessment and Demand for
Payment. Appeals of the Official Assessment must be filed either to the Georgia Tax Tribunal or to the superior court within 45 days of the date the assessment is issued.
Resolution Options for State Tax Debt
If you cannot pay the full amount assessed after the assessment process concludes, several options may be available to address state tax debt. Payment arrangements allow you to settle outstanding balances over time through a structured payment plan approved by the department.
An offer in compromise may permit you to settle the debt for less than the full amount owed if you meet specific financial hardship criteria established by the State of Georgia.
Final Considerations
A Georgia sales tax audit is a formal but routine administrative process designed to verify tax filing accuracy. Receiving an audit notice is stressful, but understanding what the audit entails and how to respond clearly can reduce confusion and help ensure a smoother process.
The most important steps are to respond promptly, provide complete and well-organized records, communicate clearly with the auditor, and keep documentation of all submissions.
Contacting the assigned auditor for clarification is always appropriate and encouraged if you are uncertain about any aspect of the audit.
Facing State Enforcement or Payroll Tax Issues?
If you’ve received a state tax notice and aren’t sure how to respond, we can help you review your options and next steps.
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