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welcome in this video you will learn what to expect when you are selected for an audit by the Missouri Department of Revenue through the audit process the department's auditors will work with you to examine your records and provide guidance for future voluntary compliance the mission of the department is to facilitate the proper functioning of state and local government by accurately and efficiently collecting and distributing state and local revenues the department accomplishes this mission by following the law fostering innovation in its operations developing cooperative relationships with the other public and private entities clearly communicating with the public and treating everyone fairly and with respect the Taxation division of the department is responsible for administering Missouri's tax laws within the taxation division the field compliance Bureau audits businesses both in-state and out-of-state to ensure the business is paying the proper amount of tax the department conducts audits for sales use withholding corporate and franchise tax as well as tire & battery fee the department makes every effort to conduct efficient audits with the least amount of interruption and inconvenience to the business as possible the department uses electronic data and systematic methods to evaluate and identify tax payers who may not be paying the right amount of tax the audit process begins when the auditor contacts the business by phone or by letter initial audit discussions will include general questions designed to help the auditor understand the day-to-day business operations these questions may include asking what accounting procedures the business uses to track a transaction from beginning to end and how the business records have been filed and stored the auditor will explain what to expect during the audit process and provide an estimate of the amount of time he or she plans to spend at your location based upon the information obtained during the initial audit discussions the auditor will work with you and schedule a date and time to conduct fieldwork and to examine the records audits are normally conducted at your business site but an audit may be conducted off-site using electronic data you have provided or the location of a third party such as your tax professionals office the length of time an auditor will be at the designated location depends on many factors including among other things the size of your business your industry the availability of electronic records and the condition and complexity of the accounting records the auditor will review the business records with as little disruption to the day-to-day business as possible many companies maintain their accounting records in electronic format if records can be provided electronically the audit time at the designated location can be substantially reduced prior to the first day of fieldwork the auditor will provide a list of records that must be made available for review this list is a starting point and additional records may be needed to complete the audit the Department generally audits a three-year period if returns have not been filed the auditor will examine at least five years of records if the volume of records is high and not available electronically the auditor may suggest sampling the records and projecting the sample over the audit period rather than reviewing every transaction this could include sampling sales transactions purchase transactions are both this method of auditing can save time for both you and the auditor while still providing accurate results you will also be asked to sign documents at the beginning of the audit process the audit authorization noticed sets forth the statutes that explain the department's right to review taxpayer records your signature acknowledges that authorizing statutes have been presented to you and that your auditor was identified as a department representative additionally an auditor may present waivers of statute of limitations after a return has been filed both you and the department have three years to make any changes or Corrections the waiver of statute of limitations is an agreement between you and the department for a specified length of time to make changes or corrections to returns for periods in the audit the waiver of statute of limitations allows time to resolve the audit establishes the audit period and protects your right to a refund if the audit shows you've overpaid during the examination of sales and purchase transactions the auditor will reconcile the amount of sales and purchases made during the audit period with the amounts filed on sales and use tax returns with the department the auditor will review sales data such as invoices or sales reports to verify whether valid claims of exemption have been accepted for items sold without tax and if the business has taken those exemption certificates in good faith the auditor will also ensure that tax was properly applied and remitted on all tax transactions the auditor will examine your federal income tax return to reconcile the gross sales between the federal return the sales tax return and the sales recorded in your accounting records during the examination of purchase transactions the auditor will review depreciation schedules asset invoices and expensive voices to ensure all applicable taxes have been paid the auditor will also reconcile any other taxes or fees relevant to your business such as Missouri withholding taxes or tire & battery fees to your accounting records to determine if all amounts were properly remitted to the department audits of other taxes such as income and franchise taxes may require additional or different audit procedures your auditor will let you know what records and procedures are necessary for this type of audit once fieldwork is complete the auditor will provide a copy of the audit work papers to you at that time the auditor will allow you time to review and gather additional information if necessary such information may include additional invoices exemption certificates or other information that would change the audit findings follow-up meetings will be scheduled to discuss the overall progress and preliminary conclusions of the audit once the taxability of all questionable items has been determined the auditor will compute the audit and provide you with a complete audit package if the audit resulted in no additional tax liability closing documents will be signed and no further action is needed from the this the audit may result in an additional liability if you are an agreement with the audit findings and will be paying the agreed upon amount your auditor will provide you information regarding the different payment options available if you are unable to pay you may request an installment agreement through the taxation division collections and tax assistance your auditor will provide detailed information on this process if you do not agree with your audit findings the auditor will direct you to the taxpayer Bill of Rights which will explain the appeal process you should receive a copy of the Bill of Rights at the start of your audit but it can also be found on the department's website if the audit identifies an overpayment of tax the department will either issue a refund or credit your account for the appropriate amount the auditor may ask you for additional information to ensure that the overpayment is processed accurately we understand that an audit can be stressful the department's goal is to assist your business and simplify compliance with Missouri tax laws this includes making the audit process as educational and beneficial to your business as possible if you have any questions please don't hesitate to contact your Auditor the audit supervisor and manager are also available to answer questions thank you for watching