Good accounting firms are busy around the clock practically year round preparing tax returns.  Every business has it's purpose and area of expertise.

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State Tax Audit Representation (STAR) is not an Accounting Firm.  It is a firm that specializes in representing clients in defense against tax audits.   Our primary focus is to get the best results on your tax audit.  We handle any type of audit, but most commonly NYS Sales Tax and NYS Residency audits.  We also handle tax collection matters.

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Brian Gordon from STAR has gained valuable experience as a NYS Tax Auditor and ultimately as a Tax Department executive leading the New York Metropolitan District.  Using this experience now in representing clients against tax audits gets outstanding results.

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The Best Way to Avoid Triggering an Audit

There's no certain way to avoid triggering an audit, but there are ways that you can reduce your risk.  States are always looking for specific red flags when they look for audit candidates. We can advise your accounting firm on how to avoid some of the red flags.  Here are some examples:

Sudden Changes in Your Filing
It's helpful to compare your returns from previous periods to your current period. It’s one of the easiest ways to observe changes. Are your sales lower? Are your expenses higher? It could be justified but it could be a red flag for the government and it can trigger an audit.  It doesn’t mean that you did anything wrong, it just looks like you may have.
 

Failing to Report Income
Particularly when it comes to Sales Tax filings, some business will report lower sales on their sales tax returns than they do on their IRS or NYS business tax return.  This is a big red flag.  If some of your sales are not subject to sales tax you still must report all of your sales and then subtract your nontaxable sales.  In that way, your total sales will agree with your business tax returns.  Failing to report all of your sales will very likely result in an audit.  

Having Too Many Expenses
If you're booking losses for several years in a row, the government is going to step in and assume that you're not running a legitimate business. They sometimes refer to consecutive years losses as a “hobby loss”.  You should review your expenses and make sure that they are all valid.  Even if they are all valid, you need experienced representation to convince the government that you have a business with the intent to make a profit, rather than deducting expenses for a hobby.

Tax planning and compliance is always about reducing risk. Not only can State Tax Audit Representation represent you during the process of an audit, they can consult with you or your accounting firm about your likelihood of being audited.