7 sales tax audit triggers companies should watch in 2026

By AI, Created 10:15 AM UTC, May 20, 2026, /AGP/ – State and local governments are expected to lean harder on sales tax enforcement in 2026 as they look for new revenue after federal support shifts. EisnerAmper’s William Flick says companies can lower audit risk by spotting common triggers and tightening compliance before regulators do.

Why it matters: - State and local governments are expected to face pressure to replace lost revenue as the federal “Big Beautiful Bill” reduces support for many programs. - Sales and use taxes are a key funding source for state and local services, so enforcement is likely to intensify. - Sales tax rates may stay relatively stable because higher rates can be politically difficult, pushing states toward broader tax bases, expanded nexus rules and more audits. - Corporate sales tax audits are expected to grow in 2026, with large companies likely to draw extra scrutiny regardless of headquarters location.

What happened: - William Flick, a managing director at EisnerAmper Advisory Group LLC, outlined seven common triggers that can increase the odds of a sales tax audit. - Flick said government tax collection is highly focused and uses multiple triggers rather than relying only on random selection. - Flick also said companies that manage or eliminate these triggers can reduce audit risk, though they cannot remove the chance of audit entirely.

The details: - States are expected to expand sales tax nexus definitions in 2026. - States may eliminate minimum sales tax thresholds, including both dollar-volume and transaction-count tests. - States are expected to broaden taxable categories to include services and digital products such as SaaS, software and digital subscriptions. - States are also expected to increase enforcement and compliance efforts, including more frequent audits. - Flick’s first trigger is a large out-of-state company doing business in a state. - Flick’s second trigger is a high volume of exempt sales or purchases. - Flick’s third trigger is operating in an industry that is prone to sales tax errors. - Flick’s fourth trigger is a high initial filing amount after registration in a state. - Flick’s fifth trigger is a vendor audit issue, where a vendor’s assessed sales taxes may prompt scrutiny of a related company. - Flick’s sixth trigger is enhanced data matching with third-party records. - Flick’s seventh trigger is failure to file, or slow filing and payment of, sales taxes. - States increasingly use technology to compare taxpayer filings with vendor and other third-party data, making discrepancies easier to spot. - Flick advised companies to conduct internal sales tax self-audits from time to time. - Flick said companies may also benefit from adding a sales tax expert to their accounting team to oversee compliance. - Flick said audit findings should not be accepted at face value and should be reviewed and challenged. - Flick said forensic accounting can uncover refunds from prior years, even after an audit.

Between the lines: - The core shift is from rate increases to enforcement-driven revenue collection. - That makes compliance quality and documentation more important than ever for companies with multistate exposure. - The audit process can cut both ways: a review may uncover overpayments, not just liabilities.

What’s next: - Companies with multistate operations are likely to see more audit attention in 2026 as states sharpen enforcement. - Businesses that sell services, digital products or other non-traditional taxable items may face new compliance questions as tax bases broaden. - Firms that want to limit risk will likely need stronger internal controls, faster filing discipline and periodic self-review. - Companies facing audit findings should expect more value from challenge and review than from automatic acceptance.