7 Triggers That Increase The Likelihood A Company Will Be Audited For Sales Taxes

William Flick - Managing Director, EisnerAmper Advisory Group

Today, government tax collection is highly focused & utilizes a number of triggers that raise the likelihood a company will be selected for a sales tax audit.

The presumption in a tax audit is that there is money owed. However, our experience has been that for many large companies a sales tax audit can actually lead to a reduction in taxes or even a refund.”

— William Flick, A Managing Director At EisnerAmper Advisory Group

PHILADELPHIA, PA, UNITED STATES, May 4, 2026 /EINPresswire.com/ -- As the Federal “Big Beautiful Bill” implements, it removes Federal support for many state and municipal programs, creating a need for them to replace that lost revenue. Because sales and use taxes are a leading method of funding state and local services and programs, there will be increased pressure on them to obtain and grow revenue.

Although increasing sale tax rates may appear to be the simplest way to raise additional revenue, it is not necessarily politically feasible. As a result, sales tax rates are expected to remain relatively stable. However, state and localities have several other ways to expand sales tax revenue in 2026 including:
- expanding sales tax nexus definitions.
- eliminating minimum sales tax thresholds (both dollar volume
and transaction count).
- broadening the tax base to include services and digital products such as
SaaS, software, digital subscriptions & other non-traditional taxable items.
- Increasing enforcement and compliance efforts, including more frequent
audits. States are expected to focus heavily on large corporations -
regardless of where they are headquartered - to generate additional
revenue.
As a result, the number of corporate sales tax audits is anticipated to grow significantly, in 2026.

Said William Flick, a thought leader in sales tax policy and process, and a Managing Director at EisnerAmper Advisory Group LLC, “Although it is possible for companies to get audited for sales taxes simply because they are randomly chosen, these days, government tax collection is highly focused and utilizes a number of triggers that raise the likelihood a company will be selected for a sales tax audit.” Flick lists some of the most common sales tax audit triggers, including:

1) Large, out-of-state companies doing business in the state.
States frequently target these businesses because they believe the likelihood of errors - and the potential for revenue recovery - is significant.

2) High volume of exempt sales or purchases.
When exempt transactions represent a disproportionately large share of total activity, auditors view this as a red flag.

3) Operating in an industry prone to tax errors.
Whether one’s company files promptly and properly or not, if its industry is prone to sales tax errors, it has greater potential to be audited.

4) High initial filing amounts after registration.
If one’s company registers in a state and its initial filing is at a high level, it raises questions about how well the company was complying prior to registering.

5) Vendor audit issues.
If a company’s vendor is audited and assessed sales taxes, that information may be used to examine whether the company has similar exposure.

6) Enhanced data matching with third-party records.
States increasingly use technology to compare taxpayer filings with data from vendors and other third parties, making discrepancies more likely to trigger audits.

7) Failure to file or slow filing/payment of sales taxes.
If one’s company is not filing sales taxes currently or is slow to file and pay sales taxes in a state, an audit will frequently be triggered.

Flick advises that companies that effectively eliminate or manage these triggers can greatly reduce the risk of their being audited. He said, “Unfortunately, it’s impossible to completely reduce the chances of being audited. However, to reduce the chances of being audited, be proactive and conduct sales tax self-audits internally, from time to time.” Because sales tax compliance can be complicated, it can be valuable to have a sales tax expert on the team, in addition to one’s own accounting team, to manage and oversee sales tax compliance.

Flick notes that when it comes to sales tax audits, all news may not be negative. “Mistakes can be made leading to overpayment, as well,” he said. “The conventional presumption by both parties in a tax audit is that there is money owed by the targeted company. However, our experience has been that, for many large companies that conduct business nationally or regionally, a sales tax audit can actually lead to a reduction in taxes or even a refund,” said Flick. He advises that governments’ audit findings should never be accepted at their face value. They should always be reviewed and challenged. Forensic accounting can often reveal significant refunds due from prior years, even after an audit.
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ABOUT: William Flick and the EisnerAmper Advisory Group
William Flick is recognized nationally as a thought leader on the subject of business sales tax nexus and compliance. He is in the sales tax leadership at EisnerAmper, one of the largest business consulting groups in the world, comprised of EisnerAmper LLP, a licensed independent CPA firm that provides client attest services; and EisnerAmper Advisory Group LLC, an alternative practice structure that provides business advisory and non-attest services in accordance with all applicable laws, regulations, standards and codes of conduct. Prior to merging with Eisner Amper, Flick owned FM Cost Containment one of the leading forensic tax recovery firms in the United States, specializing in tax confirmation and recovery of overpayments of sales and use taxes, as well as tax audit defense, utilizing proprietary research and knowledge of little-known technicalities in the tax laws of each of the 50 states, including over 13,000 tax entities throughout the United States.

For more information, please contact:
William Flick
EisnerAmper Advisory Group LLC
40 Lloyd Ave.
Suite 308
Malvern, PA 19355
Phone: 484-580-8907
Email: william.flick@eisneramper.com

Website: https://www.eisneramper.com/about-us/professional-directory/bill-flick/
LinkedIn: https://www.linkedin.com/in/williamflick
Twitter: https://www.x.com/BillFlickJr

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