All state sales and use tax laws provide a comprehensive mechanism for their enforcement. Sales tax administrators are given the authority to conduct audits of vendors and consumers to determine whether they are reporting and remitting the correct amount of tax. State tax auditors typically have the ability to subpoena and review records, to question taxpayer personnel and third parties, and to tap the knowledge of tax administrators of other states about the taxpayer’s business operations and tax returns. Large businesses usually undergo regular sales/use tax audits by the states, helping to ensure that the correct amount of tax is collected and remitted at the end of the day. Woe to the wayward vendor or consumer who has underpaid its sales/use tax liability and will be subject to interest and civil penalties—and possibly criminal penalties—on the defi ciency amount! Neal Gerber Eisenberg Tax Practice Group partner John A. Biek authored this article.

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