Michigan auditors scrutinize exemption certificates, challenge use tax compliance on equipment purchases, and often expand audit scope beyond the original notice. They use statistical sampling, industry benchmarks, and presumptions that favor the state to build their cases. These audits require immediate strategic response to prevent inflated liability projections.
Michigan sales and use tax audits without proper representation can result in inflated assessments based on flawed sampling, incorrect taxability determinations, and penalty additions that compound over time. Treasury auditors use statistical projections that can turn minor compliance gaps into substantial liabilities affecting multiple tax periods.
Businesses that handle audits without counsel often provide excessive documentation and make unnecessary admissions. They miss opportunities to challenge audit methodology. These mistakes become permanent parts of the audit record, making subsequent appeals more difficult and expensive.
| Industry / Area | Primary Audit Focus | Common Issues |
|---|---|---|
| Construction | Contractor exemptions; equipment purchases | Misapplied contractor exemptions; incorrect tax treatment of tools and equipment |
| Manufacturing | Industrial processing exemptions | Overstated or unsupported exemption claims; mixed-use equipment |
| Retail | Resale certificates; product taxability | Missing/invalid resale certificates; incorrect taxability determinations |
| Service Businesses | Digital goods; software; bundled services | Misclassification of taxable vs. nontaxable services; bundled offerings |
| Medical & Dental Practices | Equipment purchases; service taxability | Improper exemption use; taxable services treated as exempt |
| Out-of-State Purchases | Use tax compliance | Untaxed equipment, supplies, and services from non-collecting vendors |
| All Industries | Exemption documentation | Missing or inadequate exemption certificates leading to presumed taxability |
Sales and use tax audits move quickly. Waiting to get legal help often means missing opportunities to control audit scope and protect your business from inflated assessments.
Contact Ayar Law at (248) 262-3400 for immediate consultation on your Michigan sales and use tax audit. We'll review your notice and outline your defense strategy right away.
"Their professionalism and dedication were evident in how meticulously they handled every aspect of my case."
- Bernard A.
