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<br />SALES AND USE TAX AUDIT (SUTA) ADDENDUM <br />Objectives! and Methods <br /> <br />MMC's sales and use tax audit service is designed to maximize the City's income - and <br />minimize the cost of lost revenue - by detecting and documenting misallocations of sales and <br />use tax acti~ity within the statute of limitations on recoverability. <br /> <br />In performimg the sales and use tax audit program MMC shall: <br /> <br />0 Identify and correct the sales/use tax reporting errors of businesses that, based on the <br />nexps of their activities, are not properly registered with the City, <br /> <br />0 Identify and correct the reporting of businesses that are improperly reporting tax to state <br />and county pools (i.e. classifying sales tax as use tax) and thereby depriving the City of <br />sales tax revenue, <br /> <br />0 Detßct, document and correct sales/use tax reporting errors/omissions and thereby <br />generate new, previously unrealized revenue for the City. <br /> <br />0 Ensure through comprehensive audit measures that the revenue information used for <br />ongloing economic analysis includes all sales/use tax generators, <br /> <br />0 Assist the City with strategies to preserve and even enhance sales and use tax revenue <br />generated by existing businesses within the City. <br /> <br />MMC's proposed sales/use tax allocation audit services for the City includes five distinct types <br />of audits: <br /> <br />0 Taxable Nexus Field audits <br />0 Permitization audits <br />0 Deficiency assessment audits <br />0 Accounts payable audits <br />0 Quarterly Distribution Report audits <br /> <br />Taxable Nexus Field Audits <br /> <br />MMC's initial and periodic taxable nexus field audits include a physical canvassing and <br />evaluation of sales/use tax generating businesses located in the City. In the absence of this <br />undertaking, significant misallocations will remain undetected. MMC's field audits focus on <br />those businesses located in the City from which the City has not been receiving sales/use tax <br />r¡y¡e:-'U9. The result is new or 'found' revenue for the City. <br /> <br />Farnitlzat¡on /\udits <br /> <br />Wholesalers, contractors, processors, manufacturers and other non-retail businesses will <br />frequently not have a sales or use tax permit properly registered to the City in which they are <br />located because their business operations do not include a point-of-sale qualifying activity, <br />However, ¡these companies will often generate local sales/use tax from the State Board of <br />Equalizatiqn (SSE) audit deficiency assessments, occasional sales (i.e., mergers and <br />acquisitiol1s), and self-accrual of use tax on purchases. MMC's field audits facilitate the <br />