Sales & Use Tax Checklist for Multi-State Enterprises

DON'T LET COMPLEXITIES CATCH YOU OFF-GUARD

Managing Sales & Use Tax across multiple states is complex. Different rules, documentation standards, and exemptions leave plenty of room for costly mistakes—or missed savings.

This checklist highlights the areas where gaps most often surface so you can strengthen compliance and uncover opportunities before an auditor does.

1. Core Exemptions

Confirm that common exemptions are properly applied and supported:

Machinery & equipment directly used in production
Utilities such as electricity, natural gas, or process water (requires a utility study in many states)
Industrial gases such as propane, acetylene, nitrogen, etc.
Packaging materials that become part of the product sold
Safety supplies used in production environments
Operating supplies such as lubricants, coolants, and cleaning agents

2. Documentation & Records to Review

Check that records are complete, accurate, and easy to retrieve:

Accounts payable invoices (look for tax charged on exempt items)
Purchase orders & shipping documents (verify tax treatment and destination)
General ledger accounts, especially operating supplies, repairs and maintenance, equipment lease/rent
Fixed asset records, including capital equipment purchases and related installation costs
Sales & Use Tax returns and supporting documents

3. Red Flags & Common Errors

Be proactive in spotting issues that can trigger audits—or hide refunds:

Sales tax paid on exempt machinery or component parts
Tax charged on installation or setup costs that may qualify for exemption
Tax not paid on non-exempt items such as computer equipment & software, office furniture and fixtures, and maintenance shop equipment
Expired or invalid exemption certificates

4. Sales vs. Use Tax Explained

A quick reminder to keep your team aligned:

Sales Tax: Paid directly to vendors on purchases
Use Tax: Self-assessed when tax wasn’t charged at the time of purchase
Overpaying = refund opportunity
Underpaying = audit risk and penalties

5. Reverse Audits & Audit Representation

Consider proactive steps to protect your position:

Reverse audits can uncover overpayments and generate refunds
Experienced representation minimizes liability and defends exemptions
A net review balances refund opportunities with potential exposures

6. ARE YOU WELL POSITIONED?

Certain situations increase the likelihood of refund opportunities or audit questions. Ask yourself:

Do you have high utility or energy consumption?
Have you undergone recent audits—or expect one soon?
Is your accounts payable process centralized, making reviews easier?

NEED SUPPORT?

If you’re unsure about any of the above—or if you’d like us to walk through the checklist with your team—just reach out.

We’ll help you resolve issues now so you’re protected later.

Schedule a Free Consultation to see how Baden Tax Management can help protect your business in 2025.

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Property Tax Audit Readiness Checklist for Multi-State Enterprises

September 11, 2025

Stay ahead of the tax curve Navigating business personal property tax audits can be overwhelming. Different rules, reporting requirements, and valuation standards create plenty of room for risk. This checklist highlights the most common problem areas and helps your team identify issues before an auditor does. Use it as a practical guide to strengthen your audit position and avoid costly surprises. 1. ASSET & EQUIPMENT RECORDS Make sure your fixed asset records are accurate and audit-ready. Do asset listings reconcile with what’s currently in use? Are assets correctly tagged by location and jurisdiction? Have idle, disposed, or relocated assets been removed from filings? 2. CAPITAL PROJECT & EQUIPMENT PURCHASES F lag new investments that may draw auditor attention . Were large equipment purchases made in the last 1–2 years? Are all capitalized assets categorized correctly for tax purposes? Have leased or lease-to-own assets been reported accurately? 3. DOCUMENTATION & TRANSFERS Ensure supporting documents are clear and accessible. Can you document recent asset transfers, disposals, or relocations? Are reconciliation schedules current and tied to reported returns? Do you maintain depreciation schedules and invoices for large purchases? 4. JURISDICTIONAL CONSISTENCY Ensure filings are accurate across states, counties, and locations. Are similar assets treated the same across all sites? Do local returns match enterprise-level reporting? Are you accounting for state-specific valuation nuances? 5. Filing Accuracy & Archiving Be ready to produce support files quickly if requested. Are all returns, schedules, and reconciliations filed on time and archived? Can supporting documents (invoices, depreciation schedules, etc.) be produced within 24–48 hours? Is your documentation process standardized across locations? 6. COMMON RED FLAGS TO WATCH OUT FO R: Raise these with your Baden advisor before an auditor does: Large swings in reported asset values year-over-year Unusual write-offs or adjustments Recent site closures, relocations, or acquisitions Repeated amendments or late filings NEED SU PPORT? If you’re unsure about any of the above—or if you’d like us to walk through the checklist with your team—just reach out. We’ll help you resolve issues now so you’re protected later. Schedule a Free Consultation to see how Baden Tax Management can help protect your business in 2025.

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