Special Report: How to Conduct a Reverse Sales and Use Tax Audit
With tax rates averaging nearly 10% nationwide, uncovering overpayments and process gaps before an audit can protect your bottom line.
Most companies only think about audits when they are forced to. A reverse sales and use tax audit flips that approach.
Why only 27% of companies do this
Despite the clear benefits, fewer than one in three organizations actually conduct reverse audits, according to a live poll of webcast attendees. That gap represents real financial and reputational risk. Sales and use taxes average close to 10% nationwide, which means errors.
What a reverse audit actually uncovers
Reverse audits are often associated with finding underpayments and limiting exposure. But they do much more. They can surface overpayments that may qualify for refunds, reveal gaps in how tax is calculated across your systems, and identify weak processes in accounts payable, purchasing, and supply chain functions. Incorrect tax charges can strain customer relationships and affect days receivables outstanding.
How to prepare and where to start
A strong reverse audit starts with an honest assessment of your capabilities. Key questions to ask: Does your system calculate tax correctly? How easily can data be retrieved? Are invoices imaged and available in bulk? From there, evaluate whether internal resources are sufficient or whether an external tax specialist is needed. External resources bring deeper jurisdiction-specific knowledge and can act as a neutral buffer during the process.
If cost or bandwidth is a concern, start small. Choosing a short time period or a single business unit helps you gauge return on investment before scaling. Timing also matters.
Building the business case for leadership
Getting leadership buy-in means framing the audit in terms they care about. If your company is not collecting sales tax correctly, you still owe it as the seller. That financial exposure alone is a compelling reason to act. A successful reverse audit also requires a strong internal champion, committed technical resources, and clear collaboration between internal and external teams.
The process improvements that follow are just as valuable as the findings. Poor processes cause errors. Fixing them reduces risk, improves compliance, and strengthens the reputation of your internal tax department.
Check out the corresponding webcast on How to Conduct a Reverse Sales and Use Tax Audit.
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