NJ State Tax Audits, Refunds & Add'l Issues - Questions & Answers
Why me? Why was my business selected for audit?
Generally most State tax authorities, like for example the NJ Division of Taxation, have over time developed a rather sophisticated and complex set of audit selection criteria that are used to select and recommend businesses for an audit. The exact answer may vary from "it's simply your turn" to reasons of a much greater complexity. Kindly refer to the first issue of our Newsletter, which is primarily focused on this question.
Having recently decided to do "something" about my NJ Sales and Use Tax compliance concerns, what initial steps should be taken?
Performing a compliance review is an excellent starting point. While you may feel reasonally comfortable performing this procedure internally, it's recommended that you engage a professional that is skilled and focused on NJ S&UT matters. Please note that while some of New Jersey's Sales and Use Tax Statutes, Regulations and Policies may seem simple enough, many are not. In fact and often times, they are tremendously complicated and confusing.
To illustrate my point as listed above, I invite you to review one of the NJ Division of Taxation's numerous publications that they expect the business owners/operators to fully understand . Please click on the link below and let's have some fun.
Sales of Prepared Food by Food Service Providers.
Assuming that you read or at least skimmed the above publication, would a reasonable person consider a napkin to be a utencil? The Division's position is that, in some cases, the sale of an otherwise unprepared food, like a donut or a bagel to go, may be subject to sales tax! Thus in some cases a donut or bagel shop proprietor, not being aware that a napkin is a utencil, may upon audit receive a large tax assessment simply for not fully and completely understanding the above listed publication.