GA Sales and Use Tax Audit Attorney
GA Sales and Use Tax Audit Attorneys
Atlanta businesses: Don't face the Georgia Department of Revenue
alone when your financial future is at stake
Real People. Real Tax Court Results
$203,779.00
Tax Court Reduction
$333,685.00
Tax Court Reduction
$63,701.59
Tax Court Reduction
$344,874.80
Tax Court Reduction
The Reality of Georgia Sales Tax Audits
Georgia Department of Revenue auditors have become increasingly aggressive in recent years, targeting a wide range of businesses from restaurants and retail shops to service-based companies like window installers and pool maintenance businesses. With Georgia’s complex tax rules on service taxability, resale exemptions, and local tax variations, even well-intentioned small businesses often discover compliance gaps during audits.
A Georgia sales and use tax audit isn’t just an inconvenience – it’s a serious financial threat to your business.
What Happens During a Georgia Sales Tax Audit?
The Georgia Department of Revenue typically examines three years of records during an audit, though they can go back further if they suspect significant non-compliance. Most businesses find the process intimidating without proper guidance.
The process generally follows these steps:
Initial Contact
When you receive an audit notification letter, the clock starts ticking immediately. Georgia auditors typically expect a response within 10-14 days. This initial contact often includes requests for specific records and suggests potential audit dates. Many business owners make their first mistake here by agreeing to unrealistically tight timelines.
Information Gathering
During the information gathering phase, auditors request extensive documentation, including sales tax returns, exemption certificates, purchase records, sales invoices, point-of-sale reports, and general ledgers. The breadth of these requests often overwhelms unprepared businesses. Georgia auditors pay particular attention to your exemption certificate management system and use tax accrual procedures.
Field Examination
The field examination phase involves the auditor reviewing your records either at your business location or remotely. This examination typically lasts 1-3 days for small businesses but can extend to weeks for larger operations. The auditor scrutinizes transaction details, looking for patterns of non-compliance or documentation gaps. During this phase, casual conversations with your staff can inadvertently reveal issues outside the original audit scope.
Sampling Methodology
For businesses with high transaction volumes, the auditor selects a sample to examine rather than reviewing every transaction. This sampling methodology significantly impacts your potential assessment. Georgia auditors typically use stratified sampling that separates large transactions from routine ones. Without professional guidance, businesses often accept unfavorable sampling methods that overstate their tax liability.
Preliminary Findings
After completing their review, the auditor presents preliminary findings outlining potential tax deficiencies, penalties, and interest. Many Georgia businesses are shocked by these initial assessments, which can reach six figures even for small operations. At this stage, you typically have 30 days to respond with additional documentation or legal arguments.
The response period represents your best opportunity to reduce the assessment. Georgia law allows reasonable cause defenses for penalty abatement and accepts additional documentation during this window. However, unprepared businesses often struggle to gather compelling evidence within the tight timeframe.
After considering your response, the Department issues their official determination with final assessment amounts. At this point, you face a critical decision: pay the assessment or file a formal appeal. Appeals must be filed within 30 days and require specific legal arguments citing Georgia tax law and precedents.
Common Georgia Sales Tax Audit Triggers for Small Businesses
Legal assistance in many areas of tax law such as:
Restaurants
Restaurant owners frequently face scrutiny over their application of tax rates for dine-in versus takeout orders. The Georgia Department of Revenue closely examines whether food delivery services have been properly taxed, especially with the rise of third-party platforms.
Service Businesses
Service businesses often struggle with properly classifying which services are taxable versus non-taxable in Georgia. Pool maintenance companies, window installers, and similar contractors regularly face questions about how they've separated materials from labor on invoices.
Contractors and construction
Contractors and construction businesses must navigate the complex distinction between taxable repairs and exempt capital improvements. Georgia has specific guidelines that many businesses misinterpret, leading to significant assessment risks.
Resale certificate management
Resale certificate management poses challenges for many small businesses. Expired exemption certificates, incomplete documentation, or missing paperwork for tax-exempt sales frequently leads to assessments during audits.
Inconsistent reporting
Finally, inconsistent reporting between sales tax returns and income tax filings catches the attention of Georgia auditors. Discrepancies in reported sales figures across different tax types often trigger comprehensive audits.
Out-of-state Equipment and supply
Equipment and supply purchases from out-of-state vendors create another common audit trigger. Many Georgia businesses fail to self-assess use tax on these purchases when the vendor doesn't collect Georgia sales tax, creating substantial liability over time.
Georgia Sales Tax Risks for Specific Industries
Restaurant Owners
Restaurant owners face unique sales tax challenges in Georgia including:
- Food delivery services and third-party platforms like UberEats or DoorDash
- Different tax rates for dine-in vs. takeout in some jurisdictions
- Catering services that cross county lines with different tax rates
- Employee meal tax treatment
- Alcohol sales tax compliance
Retail Store Owners
Georgia retailers must navigate:
- Local tax rate variations across multiple locations
- Gift card and return sales tax issues
- Promotional item taxation (buy-one-get-one, discounts, coupons)
- Resale certificate verification and storage
- Point-of-sale system tax configuration
Contractors & Home Service
Window installers, pool service companies, and other contractors face:
- Capital improvement vs. repair tax distinction challenges
- Multi-state project taxation when working across state lines
- Material vs. labor tax allocation on contracts
- Subcontractor documentation requirements
- Tax-exempt project verification
Small Manufacturers and Distributors
Manufacturing businesses must manage:
- Manufacturing equipment exemption documentation
- Direct vs. indirect material tax treatment
- Multi-state sales tax nexus issues
- Drop-shipping tax compliance
- Inventory transfer taxation
How Cumberland Law Group Protects Georgia Small Businesses
Our approach to Georgia sales tax audit defense begins with a comprehensive pre-audit review of your business practices. We carefully examine your sales tax collection procedures, documentation methods, and filing history before the auditor arrives. This proactive step allows us to identify potential exposure areas and develop strategic responses to anticipated issues, significantly reducing your assessment risk.
When auditors request documentation, our team carefully manages the flow of information. We ensure you provide only the necessary documents while organizing them in ways that support your tax positions. This controlled approach prevents the common mistake of overwhelming disclosure that creates additional audit issues beyond the original scope.
Sampling methodology negotiation forms a critical part of our representation strategy. For businesses with high transaction volumes, how the auditor selects their sample can dramatically impact your assessment. Our attorneys leverage their knowledge of Georgia DOR practices to advocate for fair and representative sampling methods that prevent statistical distortion of your tax liability.
Throughout the audit, we professionally engage with Georgia Department of Revenue personnel, presenting legal arguments for favorable tax treatment of borderline transactions. Our attorneys stay current on Georgia tax rulings, administrative decisions, and legal precedents that can support your position on contested items.
If preliminary findings indicate potential liability, we implement strategic documentation recovery efforts, working with your vendors, customers, and internal team to locate supporting evidence that may have been overlooked. This process often significantly reduces proposed assessments before they become final.
Should you receive an assessment, our post-audit resolution services include negotiating payment plans that minimize interest charges, pursuing penalty abatement based on reasonable cause arguments, and representing your interests through the appeals process when appropriate. Our goal is always to achieve the most favorable financial outcome possible for your business.
Our Client Reviews
Free Consultation for Georgia Businesses
Your business has too much at stake to face a Georgia sales tax audit without expert representation.
If you’ve received an audit notice from the Georgia Department of Revenue, contact Cumberland Law Group today for a confidential consultation. Our Georgia sales tax attorneys will help with the following:
Understanding the Audit Process
The first step towards resolution during an audit is gaining a thorough understanding of the process. Your tax attorney can explain the audit procedure, what to expect, and your rights and responsibilities during this time. They can help you understand the issues the auditors are examining, and why these particular aspects of your tax return have come under scrutiny.
Reviewing and Preparing Documentation
A critical part of resolving an audit involves reviewing and preparing the necessary documentation. Your tax attorney will guide you in gathering the required records that support the entries on your tax return. This could include receipts, invoices, bills, legal papers, loan agreements, or logs and diaries. Organizing and presenting this information effectively can often help resolve questions the auditor may have.
Negotiating and Advocating for You
If the audit results in additional tax assessments, your tax attorney can negotiate with the tax authority on your behalf. They can challenge the auditor's findings if there are discrepancies or if the auditor misinterpreted the law. If necessary, they can also represent you in appeals conferences or even in court. Your tax attorney can also negotiate payment plans or settlements if you owe additional tax and penalties.
Providing Long-Term Solutions
Beyond the immediate audit, your tax attorney can also help you implement long-term strategies to minimize the chance of future audits and tax disputes. This might involve restructuring your business, redefining your tax planning strategies, or ensuring that your record-keeping practices are robust and aligned with tax laws.
Our Case Results
Currently-Not-Collectible (CNC)
Taxpayer owed over $200,000. Result: Entered into CNC ($0 payment).
Audit Reconsideration
Taxpayer owed over $16,000 for tax year 2014. Result: IRS approved audit reconsideration for $0.
Tax Court
The Court ruled that the Taxpayer did not have a tax liability for tax year 2017.
Installment Agreement
Taxpayer owed over $55,000 and assigned to an IRS Revenue Officer. Result: Client is currently in a $500 per month installment agreement and protected from IRS enforcement actions.
Tax Lawyer FAQs
Most frequently asked questions and answers
What Tax Legal Services Does the Firm Provide?
Have you been served with legal paperwork and don’t know what to do next? We can help. Our team of experienced tax attorneys are here for all your needs, no matter how big or small they may be! We provide assistance in the following areas: Tax Audits IRS Appeals Innocent Spouse Relief IRS Fresh Start Program Penalty Abatement Currently-Not-Collectible Levy and Wage Garnishment Trust Fund Penalties Tax Lien Release Offers-In-Compromise Criminal Tax Payroll Tax Sales Tax Tax Court Tax Preparer Penalty
What is the Statute of Limitations for Tax evasion and Tax Fraud?
The statute of limitations set by 26 U.S.C. Section 6531 governs the time period during which the government can bring charges against an individual for criminal tax offenses. As a general rule, no person can be prosecuted or punished unless the indictment is found within 3 years from when the offense was committed. However, tax evasion and tax fraud are covered by a list of exceptions where the period of limitations is extended to 6 years from the date on which the fraudulent activity was completed.
Received an IRS/State Audit Notice?
Rates for tax audits have been steadily rising. The IRS has become more aggressive in the number and quality of tax audits. If you have been notified by the IRS or a state tax agency that your tax return has been selected for review, it is very important that you do not disregard notices. Doing so may have serious consequences, including losing your appeal and legal rights. Getting professional help from a tax attorney is important to protect your rights and achieving the right result. Our attorneys are knowledgeable in handling income tax audits, sales tax audits, payroll and employment tax audits, and estate tax audits.
What Collection Defenses Stop IRS Enforcement Action?
Installment Agreements: If a taxpayer cannot pay the tax owed in full, the taxpayer has the option of setting up an installment agreement. The IRS is generally prohibited from taking collection action (except the filing of a Notice of Federal Tax Lien) when an installment agreement proposal is pending, or when an installment agreement is in force. This important tool protects a taxpayer from a bank levy, wage garnishment and seizure of property. The same arrangement can be worked out with state taxing authorities.
What are Tax Penalties?
If you fail to pay what you owe to the IRS on time, the government won’t just wait patiently for you to resolve the situation. The IRS imposes tax penalties and fines on your account almost immediately after you miss the due date. The longer you wait to pay what you owe or negotiate a tax settlement, the worse your income tax penalties will become. Eventually, you might even face seizure of your assets or your business to cover your debt.
Will the IRS release a bank levy?
The IRS issues a one-time levy to your bank account and has rights to all of the funds in your accounts, up to the total balance due. A bank levy can only be released within 21 days from the date it was issued.
The IRS only seizes the funds in the account when the levy was placed. If you make additional deposits during that time such as direct deposit paychecks, the IRS has to issue a new levy to get those funds. If you have outstanding checks or automatic payments when the freeze goes into effect, you may want to make a deposit to cover those impending withdrawal. If you have a bank levy please call us and speak with a tax attorney ASAP due to the strict release deadlines.
What is Innocent Spouse Relief?
Taxpayers are required to file a tax return. Your return reports to the IRS what your income was for the previous year.
When filing, the taxpayer often has several options of what is called “filing status.” The two most common filing statuses are Single and Married Filing Jointly. If an individual is unmarried, files as single and owes taxes for that return, the obligation to pay the taxes belongs to that individual, and no one else. If the individual, for whatever reason, failed to pay their taxes, the IRS can only go after that individual.
However, married couples usually choose the Married Filing Jointly filing status. While this filing status usually only proves beneficial, a tax return filed in this manner is a “joint return,” and it creates a joint liability to pay the tax due. What this means is that the tax due on the return becomes legally due by both parties, and the IRS may choose to pursue both or only one party.
There is however, a way to gain relief from tax owed on a joint return if the tax liability is solely the fault of the other spouse. This is called Innocent Spouse Relief. It is important to consult with a tax attorney regarding the conditions for an Innocent Spouse Relief.
Tax Court Wins
At Cumberland Law Group, we take immense pride in our record of success in tax court. Our dedicated team of tax attorneys has earned numerous victories, highlighting our commitment to provide top-tier legal representation for our clients facing tax disputes.
Our Process
Consultation
A tax attorney will advise the best options for tax relief.
Stage 1: Examination
In-dept investigation of your IRS or state agency notices.
Stage 2: Relief
Negotiate the best possible resolution with the IRS or state tax agencies.
Stage 3: Tax Planning
How to avoid future tax issues with the IRS and state tax agencies.