Nevada Tax Form Notes (Page 2 of 4) in pdf

books, papers, records and equipment of any person

BUSINESS RECORDS NEEDED

selling tangible personal property and any person liable

FOR SALES/USE TAX AUDIT

for the use tax and may investigate the character of the

Businesses

should

retain

all

basic

records

per

business or the person to verify the accuracy of any

NRS 372.735 for not less than four years for businesses

return made, or if no return is made by the person, to

registered with the Department and not less than eight

ascertain and determine the amount required to be paid

years for businesses not registered with the Department.

by law.”

Having proper records will speed up an audit.

The

following records are the minimum that should be

If you are chosen for an audit, the following information

retained by a business:

may be helpful in preparing for the auditor. Knowing

what to expect will make the audit less stressful for all

A sales journal: This is an accounting device

parties involved.

that records monthly sales.

It should be

supported by individual sales invoices that show

The auditor will first contact you to schedule a mutually

all parts to the sales transaction. Sales invoices

convenient time, date, and location for an audit. The

should

pre-numbered

and

issued

auditor and you will agree to a date that will provide

sequential order.

All documents used to file

adequate lead time for you to prepare your accounting

monthly/quarterly sales/use tax returns should

records.

Most audits are performed at the business

be kept together.

location, but may take place at the CPA/bookkeeper’s

office, in the owner’s office or home, or at the

Purchase journal/cash disbursements journal:

Department of Taxation office. This is normally based

This is a listing of all items the business

on the convenience of the taxpayer.

purchases, whether for inventory, assets or

operating expenses. This journal is supported

If the business is already registered for Sales & Use Tax

by paid vendor invoices.

Usually a business

with the Department, the audit will usually cover the

files these paid invoices in alphabetical (A –Z)

previous 3 years. If not registered, the audit can go back

order by vendor name.

as far as 8 years. (NRS 360.355) The same applies for

Payroll journal: This should be a detailed listing

Business Tax.

of each employee’s pay history. It is required for

all payroll-related taxes.

In addition, records

For a Sales and Use Tax audit, depending on the type of

regarding health care benefit payments made on

business, you will need some or all of the following

behalf of employees by the business should be

business records:

available for the Modified Business Tax portion

of an audit.

Copies of all previously filed tax returns with any

Bank records: These should include a check

related reports or work papers you used to

complete them.

bank reconciliations and cancelled checks.

Detailed general ledgers and a chart of

Business checks should be issued in sequential

accounts, if used.

order.

Sales invoices, journals or sales records.

Monthly, quarterly and annual tax returns for

Tax resale certificates or exemption letters

state/federal taxing authorities: These records

received from any exempt customers.

should be supported by all working papers,

Federal Income Tax returns for the years being

details and supporting source documents related

audited.

to filing returns.

Purchase invoices and receipts for the audit

All

accounting

records

may

period.

completed/maintained

in-house

A copy of your cash disbursement journal if

bookkeeping/accounting service may be used.

maintained or your check register.

If an outside service is used, it should provide its

Asset listings and depreciation schedules.

clients

with

basic

journals

and

ledgers

All bank statements and cancelled checks for

necessary to review the business’s financial

the audit period.

history.

As a business grows, its accounting

10.

Cash register “Z” tapes if used.

structure should be re-evaluated. If records are

Not all businesses need or have such extensive

maintained on a computer system, they should

accounting records. The auditor can determine during

be complete and timely, so that they may be

the initial phone interview the nature and extent of the

useful in the audit procedure.

A back up of

records required for your audit. The Nevada Revised

computer-maintained

accounting/financial

Statutes require that a registered business keep their

records is recommended.

records for at least 4 years, 8 years if not registered.

(NRS 372.735)

PREPARING FOR AN AUDIT

You and/or your business may be chosen at any time for

Upon completion of the audit, the auditor will explain the

a routine Sales & Use Tax Audit. Pursuant to Nevada

findings and the Department’s appeal procedure in

Revised Statutes (NRS 372.740), “The Department, or

detail.

The audit may result in any one of three

any person authorized in writing by it, may examine the

determinations:

Nevada Tax Form Notes Page 2

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