Do Your Sales Tax Accrual Account Reconciliations!

by | Jul 14, 2022 | Audits, General Business, Stephanie's Wisdom | 0 comments

If you are ever audited, one of the first things that the auditor will do is reconcile your sales tax accrual account to make sure that you are remitting what your own accounting records reflect should be remitted.

Regardless of which basis that you use, if there are significant differences between what was reported on your sales tax return and the sales tax accrual account, you will have some major explaining to do. That is why it is important to reconcile the account periodically.

We discuss it further in the video below.

Key Takeaways:

  • Reconcile the sales tax accrual account  and the use tax accrual account periodically.
  • Document why there are differences and adjustments. Was there an adjustment because of bad debts, credit memos, etc?
  • Document the reasons for the adjustment(s) in real time.
  • Address the timely filer discounts that may be a part of the reason why there is a balance in your sales tax accrual account.

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