Quote:
Originally Posted by Republicaninmass
An exemption cert is pretty much a guaranteed audit, so if your book are up to snuff, no reason not to have one. Unless you dont like headaches from hell
|
Giving a seller you are buying from a tax exemption certificate is not a guarantee that you will be audited. Remember, the exemption certificate is only given by the buyer to the seller. There is no copy of the exemption certificate that is filed or sent to the state(s) by either party. The state has no way of knowing you ever gave someone an exemption certificate, unless they ever have a cause or reason to audit and inspect the records of the party you're buying from. If the seller didn't charge you sales tax on a purchase because you gave them an exemption certificate, a state sales tax agent inspecting the seller's records will likely ask the seller to show proof as to why they didn't charge and collect sales tax from certain customers. They'll simply ask to see all the valid, signed exemption certificates they were given by those purchasers/customers they didn't charge sales tax to. This is the point where a state sales tax agent would see the name of someone who gave a sales tax exemption certificate to that seller. And yes, if they wanted to, the state agents could follow up and contact the various purchases about their exemption certificates as well. Chances are the state agents will not start contacting every purchaser that gave that seller an exemption certificate, especially if the amount of exempt sales is relatively small. State sales tax auditors operate like most everyone in real life and follow a cost-benefit pattern. If there wasn't a large amount of non-taxable sales reported for a particular buyer to begin with, they're not about to expend a large amount of time and resources to question it and actually contact that particular sales tax-exempt buyer or start looking at them as an audit prospect either. Sales tax agents are people also, and they go in to look at the seller they are assigned to review, get their job done and then get out and on to their next assignment as quick as they can. They are not necessarily there to also review and audit the purchasers/customers who claimed exemptions with that seller. Of course, that isn't to say that if they suspect or see something funny or suspicious that they wouldn't consider contacting a particular buyer to follow-up with them. It is just not very likely.