administered by the Department of Taxation are subject to audit. Below you'll
find articles of use to you if you're scheduled to be audited. Hard copies of
the documents are available for download as Adobe Acrobat 4.0 files
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latest version of Adobe Acrobat reader. Many of our forms can only be viewed
with version 4.0 or better.
Audits/Preparing for an Audit
auditor will first contact you to schedule a mutually convenient time, date and
location for an audit. The auditor and you will agree to a date that will
provide adequate lead time for you to prepare your accounting records. Most audits
are performed at the business location, but may take place at the
CPA/bookkeeper's office, in the owner's home, or at the Department of Taxation.
This is normally based on the convenience of the taxpayer.
If the business is registered for Sales and Use Tax with the department the
audit will usually cover the previous 3 years. If not registered, the audit can
go back as far as 8 years. (NRS
360.355). A Modified Business Tax, if the business has employees
or other Excise Tax audit is usually done in conjunction with a Sales and Use
Tax audit. Be aware that if you register for Sales and Use Tax, you are not
automatically registered for any other required Excise Tax.
Sales and Use Tax audit, depending on the type of business, you will need some
or all of the following business records:
1. Copies of previously filed tax returns with any related reports or work
papers used to fill them out.
Detailed general ledgers and a chart of accounts.
Monthly sales journals or registers.
certificates and exemption letters collected.
Federal Income Tax returns for the years under audit.
disbursement journals or check registers.
depreciation schedule or fixed asset schedule.
statements or cancelled checks
register "Z" tapes.
records the auditor may identify as the audit is performed.
Not all businesses need or have such extensive accounting records. The auditor
can determine during the initial phone interview the nature and extent of the
records required for your audit. The Nevada Revised Statutes require that a
registered business keep their records for at least 4 years, 8 years if not
Upon completion of the audit, the auditor will explain the findings and the
Department's appeal procedure in detail. The audit may result in additional tax
owed a credit for over paying a tax liability, or no financial adjustment
because the business is in full compliance of the tax law. After a supervisory
review of the audit, a Notice of Deficiency or Credit along with a letter
explaining how the audit was performed and the results of the audit will be
sent to you. In addition a Petition for Redetermination form, a copy of the related
statutes regarding your rights and responsibilities, and a return envelope will
be included. The Notice of Deficiency will clearly show the due date for
payment of any additional tax due or date to petition (appeal) the
determination to avoid further penalties and interest. (NRS 360.350, NRS 360.400)
is to educate the taxpayer and assure that businesses comply with tax law.
Every business and taxpayer is required to pay their fair, legal share of the
tax. You should also know that auditors cannot be evaluated based on the amount
of tax recovered during an audit. (NRS
The Process for Appealing an Audit
Whether it's an unexpected tax
answer, audit billing, a deficiency or other notice, we will make every effort
to clarify our position on the issue (NRS
The Department's appeal process starts informally and becomes more formal as
the issue is raised to a higher authority.
1) First, contact should be a telephone call to the auditor or revenue officer
who is handling the case and ask them to explain the assessment and the
relevant legal authority.
2) If further questions remain or if further clarification is necessary, ask to
speak with the employee's team leader or supervisor.
3) If you are questioning an audit assessment or deficiency determination,
complete the Petition for Re-determination form and return it in the envelope
provided. This form must be returned to the Department within 45 days from the
date of the Deficiency Determination or Notice of Credit. This 45 day due date
is clearly stated on all notices. Failure to file the Petition for
Re-determination timely may result in the determination becoming final and you
will be considered to have waived your appeal rights. The Petition for
Re-determination sets forth the amount of the determination being contested and
the grounds for seeking it (NRS
360.365, NRS 360.360).
4) The Petition Supervisor will review the Petition for Re-determination and
the facts surrounding the case. If there is additional documentation not
previously presented to the auditor or revenue officer, the matter will be
referred back to the original employee for consideration.
5) If there is still a disagreement with the assessment and there is no
additional information to present, the matter will be forwarded for an
evidentiary hearing, known as an Oral or Administrative Hearing, before an
Administrative Law Judge (NRS
360.370). Hearings are scheduled in Las Vegas, Carson City,
Reno or Elko; whichever is appropriate. Go to our Hearings page
for more information concerning Administrative Hearings.
6) If you disagree with the decision of the Administrative Law Judge, you may
appeal the decision to the Nevada Tax Commission (NRS 360.390). The
Notice of Appeal must be filed within 30 days of the issuance of the Hearing
Decision. The hearing before the Tax Commission will take place in Reno, Carson
City or Las Vegas. Department policy requires that a representative from the
Attorney General's Office represent the Department. You may represent yourself
or seek outside assistance. For more information about hearings before the
Nevada Tax Commission go to our Hearings page.
7) If you are not satisfied with the decision of the Nevada Tax Commission, you
may appeal within 30 days to the appropriate District Court of the State of
Nevada (NRS 360.395, NRS
Throughout the appeal process, the Department will strive to keep you informed
of your rights and responsibilities; and times, dates and locations of meetings
and deadlines. Be advised that at each level of the appeal, there are mandated
time limits for responses. (NRS
360.360, NRS 360.390).