Accounting Articles > Illinois Sales and Use Tax Audit:

Why was I chosen?

This is always the first question that clients ask. Usually, if you ask a Revenue Auditor, they will say that they don't know, and that they were simply assigned to complete the examination.

At the end of the day it really doesn't matter; regardless of why you were selected, we've still got to get you through the audit.

However, if you are being audited, I know from experience that “just because” may not be enough justification for the pain and agony that you are about to go through, so here are four of the most common reasons for why businesses are selected for audit.

1. You were reported
   It's quite possible that someone called the anonymous “800 Number” and reported that you were breaking the law.
2. Your returns were completed incorrectly
   Remember that both your sales tax returns and your Illinois income tax return go to the same agency. The twelve sales tax returns, which report total income on a cash basis, and your Illinois Corporate Income Tax return, which report your income on either a cash or accrual basis must either match, or the difference must be explainable through a cash to accrual analysis of your sales. If there is a large, material difference, you may be selected for audit.
3. One of your vendors was audited
   This is a phenomenon called Crabbing, in reference to the fact that crabs only walk sideways. The assumption is that birds of a feather flock together. If one of your vendors has been audited and found guilty of violations, the auditors are likely to go next to the largest customers of that vendor and audit them. This is frequently the cause when customers who have never filed a sales tax return in their lives get audit notices.
4. Your industry has been targeted
   If traditionally your industry has not collected and remitted sales tax, and the tax laws have changed, or it has been determined that many of the people in your industry have not been following the sales and use tax laws, then you might be audited. This set of circumstances will also incur an audit if you have never filed a return. Maybe you should have?

Whatever brought on the audit, the fact remains that we still need to get you through it.