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.


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