Sales and use tax for retail
A retailer collects sales tax from customers at the register and online, then sends it to tax authorities. That sounds simple until the product mix, the sales channels and the customers vary. This page explains how a sales and use tax review applies to a retail business. It is general information, not tax advice.
Why this matters for retailers
Retail has a high volume of taxable transactions. Every item must be matched to a tax treatment at the point of sale. If a product is mapped wrongly in your system, the error repeats on every sale of that item.
Mistakes run in both directions. You may have collected too little and owe more. You may also have collected or paid too much, for example by charging tax on an item that is exempt, or by not claiming tax back after a return. A review looks for both.
What a review typically examines
A partner firm examines how your tax was set up, collected and reported. For retail the likely areas are:
- Product taxability. Whether categories such as clothing, food, supplements or items sold in bundles are treated correctly. States list taxable and exempt items in their own matrices, so treatment differs by jurisdiction.
- Resale and exemption certificates. If you sell to resellers or exempt buyers, whether you hold valid certificates for those sales. Some states presume retail sales are taxable and require the seller to keep certificates.
- Shipping and delivery charges. Whether tax on shipping and handling follows the rules that apply, which can depend on whether the charge is separately stated.
- Discounts, coupons and gift cards. Whether the tax base is reduced correctly for discounts and coupons, which jurisdictions can treat differently.
- Returns and refunds. Whether tax was refunded to customers and then adjusted on your return.
- Online and multi-location sales. Whether you collect in the places where you are required to, and use correct local rates for each store.
- Use tax. Taxable purchases made without paying sales tax to the seller can owe use tax.
Note: A review of tax paid in the past may be limited by time periods set by each authority. [VERIFY: look-back limits for refund claims]
What to have ready
- Sales tax returns for the periods in scope.
- Point of sale tax settings and product category maps.
- Sales reports by store, channel and product category.
- Exemption and resale certificates on file.
- Purchase records for store fixtures, supplies and equipment.
- Notices or audit letters from tax authorities.
- Contacts in accounting and in your point of sale or e-commerce team.
Ask your point of sale provider or e-commerce team how new products get their tax setting. In many retail businesses a buyer adds an item and nobody checks the tax code. That habit is a common source of repeated error, and a firm will want to understand it.
What happens after you submit a request
You submit a request and a partner firm contacts you. You provide data, and the firm reports what it found. Any claims or filings are agreed with you and handled according to the firm's own terms. Fairview does not give tax advice. If an authority has already sent you a notice, say so in your request, because that affects how the firm plans its work.
How matching works
Fairview connects you with a partner firm. The firm does the work. Firm type depends on your size, and Fairview matches each request by hand rather than by a fixed cut-off. Choose the larger business form, the smaller business form or the other form.
An independent partner firm that specializes in sales and use tax handles this work. Fairview Audit makes the match. We do not perform the review ourselves.Who does the work
Frequently asked questions
Can a review find tax we under-collected?
Yes. A review is not limited to refunds. You decide with the firm how to handle any finding.
Does it cover online sales?
It can. Scope is agreed with the firm. [CONFIRM: partner industry detail]
Is this tax advice?
No. Fairview connects you with a partner firm. Advice comes from the firm.
Related pages
Tell us what you need reviewed. We match you by hand with an independent partner firm. You keep your existing vendors.Find out what you are overpaying.