A Texas sales tax audit request can involve several years of transactions stored across accounting software, sales systems and paper files. A useful first advisory review connects the request, the available records and the questions that remain unresolved. The goal is not to assume either that the business owes tax or that the auditor is wrong. You do not need a perfect file before asking whether a matter fits our practice.
This checklist is an organizing framework. Follow the actual Comptroller correspondence and keep confidential records out of public inquiry forms.
Start with the request and the current stage
Create a one-page summary with the business name, tax type, periods under review, correspondence dates, requested action and response date. Identify the stage: an initial audit questionnaire, a records request, fieldwork or proposed adjustments. Keep later correspondence beside the original request so a reviewer can follow what changed.
The Comptroller describes initial taxpayer contact as a discussion of business operations and needed documentation. Later fieldwork can produce schedules of potential adjustments. Those are different starting points for a review. [1]
Copy dates from the correspondence rather than relying on a general online deadline. If the required action or date is unclear, seek clarification promptly through the agency contact identified in the correspondence. If a deadline is near, do not wait until every record is assembled before seeking appropriate help. Do not assume that requesting advisory help pauses the audit or changes a deadline.
Build an index instead of a document pile
Give each requested category an index entry showing the covered dates, source system, file location, responsible person and status. Use plain statuses such as available, partly available, missing or clarification needed. Preserve original files and distinguish them from working copies and explanations prepared later.
Map the request to records such as:
- Sales invoices, sales-system reports and customer credits.
- Purchase invoices and capital-asset records.
- Resale or exemption certificates and related transactions.
- Accounting ledgers, financial statements and bank records.
- Filed sales tax reports and the workpapers used to prepare them.
These categories are consistent with the Comptroller's audit planning checklist. Use the actual request to define the records for review; this checklist does not replace the request or advice about its scope. The Comptroller's documentation guidance also identifies electronic data and support for credits or overpaid tax. [1] [2]
Make gaps visible. A missing month, an unreadable export or records held by a former bookkeeper should have an owner and next action, not an unexplained blank.
The general rule is to keep sales and use tax records for at least four years unless the Comptroller gives written authorization for earlier destruction. Retain records for the periods under audit until the audit is completed; if you appeal the findings or file a refund claim, keep them until the case is resolved. Other applicable retention obligations may require longer storage. Do not treat the four-year minimum as permission to destroy records in an unresolved matter. [3]
Connect the transactions to the reported figures
For each reporting period, create a reconciliation that traces source records through the accounting totals to the filed report. Keep total sales, taxable sales, tax collected and reported taxable purchases distinct. Explain differences rather than changing a spreadsheet simply to make totals agree.
Sales: Compare sales records with the amounts reported. Identify returns, credits, timing differences and accounting-system changes for review. Also compare tax collected with tax reported. The Comptroller's audit manual separately addresses reconciliation of recorded and reported sales and verification of sales tax collected. [4]
Exemptions and resale: Connect each claimed treatment to the relevant transaction and supporting documentation. The Comptroller instructs businesses to keep accepted resale and exemption certificates as support for not collecting tax. A label in accounting software is not the supporting certificate; mark missing or unclear support for review. [3]
Purchases: Include business expenses and asset purchases, not only customer sales. Identify what was purchased, its use, tax shown on the invoice and any use tax reported. For example, taxable property purchased from an out-of-state retailer without Texas tax and used in Texas generally raises a use-tax obligation. Whether an exemption or credit for sales or use tax legally paid to another state applies requires a transaction-specific review. [5] [4]
Record sampling questions without deciding the result
The Comptroller may examine transactions in detail or use sampling; when it samples, the auditor explains how errors are projected. [1]
Keep the sampling correspondence and record questions such as:
- Which transactions, accounts and periods are included?
- How does the selected sample relate to the broader records?
- How are unusual purchases or business changes addressed?
- Which transactions receive detailed review, and how is any projection calculated?
Ask specifically how capital-asset purchases will be examined. The Comptroller's sampling policy calls for detailed review of asset purchases unless the auditor establishes a consistent, recurring acquisition pattern. That is not a blanket prohibition on sampling capital assets. [6]
These questions help define a factual review. An unusual transaction alone does not establish that a sample is invalid, and a projected adjustment should not be treated as a conclusion without reviewing its basis.
Define the advisory work before sending records
A useful request identifies the desired output: a records-gap list, a reconciliation, or a documented set of transaction questions. Explain what is already available and which decision or response date is approaching. For the firm's existing scope, see Texas sales tax audit advisory.
Patel Tax Advisors is not a CPA firm or law firm and does not provide legal advice. Record organization and tax analysis do not automatically include agency communication or representation; those roles require separate review of authorization and permitted scope. An inquiry does not establish an engagement. Matters outside that scope require an appropriately qualified professional.
Do not send notices, returns or personal identifiers through the public form. Supporting records follow the firm's secure process after an engagement is accepted. This article provides general preparation information, not a determination of liability or an appeal strategy.
Have a Texas sales or use tax audit request? Tell us the audit stage, tax periods, response date and approximate amount involved through our existing intake. Keep confidential records out of the public form. We review fit, authorization and scope; contacting us does not extend a deadline.