My company has requested exemption certificates from all of our customers. However, it's been a while, and they have not all been returned. If we do not charge tax when we don't have a certificate, and we get audited, are we responsible for the tax to the state?
If you don't have the exemption certificates when you get audited, you will probably be held responsible for the taxes. That's why you get them - to prove why you didn't charge tax like you should have. Depending on the state and the auditor, you may be given some time (usually a couple of months) to scrounge them up. But you will lose money because you won't be able to get the certificates from everyone. Some sales were probably taxable, some customers will be uncooperative, and some will have gone out of business.
On the flip side, as a customer, we supply our exemption certificates when requested, however we have not been required to do so by all of our vendors. What happens when we get audited?
As a customer, if the vendor screws up and doesn't get the certificate from you, it isn't your problem (assuming you've paid any appropriate use taxes on your own). But be prepared for a phone call or letter in a couple of years when they get audited.
Sales Tax Guy
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