Magento Sales Tax and Audits: Information For Your Ecommerce Business

by | Jun 27, 2017 | Blog, Ecommerce | 0 comments

Auditors are everywhere. Most businesses expect an audit.  It can come as a surprise to learn authorities will send auditors.  Sometimes they are hired from other states to find unreported sales and use tax revenue, such as Magento sales tax.  Some states have remote offices. Are you prepared for an audit of your website?

For example, the TX Comptroller has audit offices in LA, NY City, and Tulsa, OK. California has offices in Chicago, NY, and Houston. There are MI Department of Revenue offices near Chicago, Dallas, and NY. The FL Department of Revenue has offices in Atlanta, Chicago, Dallas, Houston, LA, NY, and Pittsburg. The UT State Tax Commission  “spends a majority of their time at taxpayers’ offices looking at detailed sales and purchase transactions” and “travel to locations all over the US to perform their work.”

Magento Sales Tax


Employees at the WA State Department of Revenue may audit businesses in many states. They split the country into sections. They develop and use audit programs. Those programs optimize accurate tax reporting and payment by businesses located in the target area.

What do auditors in other states do?

Auditors look at sales by companies that have connections in the auditor’s home state. A company doesn’t have to be registered with a state to be targeted by that state’s auditors. While many audits are selected by a random sampling of registered businesses, auditors visit unregistered businesses when evidence suggests they may owe the state tax revenue too. This is true both in-state and out.

Many states have increased audits since the Great Recession. They hire new auditors as needed. NM’s Audit and Compliance Division added about 62 employees since economy crashed. In 2015, the WI Department of Revenue announced it needed 102 additional auditors and 11 additional agents to help uncover about $80 million in unpaid tax revenue. Many of the new hires are focusing on businesses based in other states.

States work together

State tax administrators often work together. Agreements between states can greatly help help audits:

  • MSATA (IL, IN, IA, KS, MI, MN, MO, NE, ND, OH, OK, SD, WI)
  • WSATA  (AK, AZ, CA, CO, HI, ID, MO, NV, NM, OR, TX, UT, WA, WY)

Oklahoma to base auditors in other states

OK does not have offices in other states, but sends out auditors as needed. Between 2014 and 2017, it did more than 460 audits of remotely based businesses. Also, a law will soon allow the Tax Commission to have a stronger presence out of state.

HB 1427 allows the OK Tax Commission to create and maintain an Out-of-State Tax Collections Enforcement Division. It enhances the following:

  • “Sales and use tax collections related to sales or transactions involving residents of OK and out-of-state vendors with a nexus to the State of OK”
  • “Collections of any other unpaid taxes owed the State of OK by out-of-state individuals, firms, and corporations”

It may audit anyone it thinks owes tax revenue. The law starts November 1, 2017.

How would your business and Magento sales tax do during an audit?

Get your free copy of the Sales and Use Tax Audits Uncovered. Learn about audit triggers, avoiding them, and how to protect your business and Magento sales tax against tax risk.

Most of all, contact Web 2 Market for more info on Magento sales tax and audits.


Web 2 Market Digital Marketing Case Study

American Technical Publishers (“ATP”) is an industry leader in textbook publishing for career and technical training. Founded in 1898, the company sells worldwide through its website on the domain and by phone order. As ATP improved its product...

How to GDPR prepare your online store?

GDPR or General Data Protection Regulation is an updated version of the 1995 Data Protection Directive. With the advance of the different ways we go on the internet, a more defined law was in demand. The GDPR is drawn to protect the rights of all the European Union...

Learn how eCommerce with Magento helps expand Online Business

Online shopping is a billion dollar industry. And Magento has cornered the eCommerce market with more than 250,000 online stores in America alone. The reputation is because of the Magento program’s ability to fit any online business. All that stops you from standing...

Magento website templates – How the right template can boost sales?

Magento is an out of the box eCommerce software. And it also has a free Community version which is the most popular. Because of the way Magento is set up, no two online stores look and feel the same. The uniqueness comes from the way the store is designed using...

Hosting for Magento – How to find the right hosting for eCommerce stores?

Magento is a huge program to host. Without a great hosting partner, the Mage program loses all its benefits. Coded on the PHP framework, Magento is a very popular program that comes without a host. The one click out of the box store is easy to install. However it is...

eCommerce Magento theme – How to choose the right theme for your online store

eCommerce Magento theme involves different ways to go about it. Magento is an open source program which comes with a theme and a blank theme file which can be worked on. This helps online stores to add unique features to their store. For example, you can create blocks...

Magento site – What are the basic features for an online store

Magento is a huge program that is popular among eCommerce owners. All you need is to install Magento and set up the store. This out of the box solution even allows people to customize the store. However the customization should be undertaken by an experienced person....

Free Magento templates for Community and Enterprise stores

Magento has changed the eCommerce industry by providing the out of the box store solution. No matter what type of products you sell, Magento fits. Most business owners are however not very in tune with how to setup their eCommerce store. This includes finding the...

Magento Free templates – Tips to choosing the right store template

Magento offers a lot of potential for eCommerce store owners. It is open source, and provides an out of the box easy solution. This means the store is flexible to design and code according to your requirements. The very first thing that most store owners look for is a...

Design Magento – Three design tips for every online store owner

Magento is a very popular eCommerce program with online store owners. The way you can design Magento stores is unique. This of course leads to creating your very own branded store. There are however some things to consider when designing your store. Let’s look at just...