3-location Chicago S-Corp, 412 errors across 3 years, state sales tax audit. Complete cleanup in 5 days. Audit closed zero penalties.
01The Situation
This 3-location Chicago S-Corp received a state sales tax audit notice. Their CPA reviewed the books and told the owner honestly: too many errors to stand behind them. He needed a cleanup before responding. He called us the next morning.
02What We Did
We ran a full diagnostic: 412 errors across 6 categories. Delivery orders had been taxed at the dine-in rate for 28 months, a systematic overpayment in the restaurant's favor. Cleaned in 5 days, audit response submitted with full documentation. Closed with zero penalties and a sales tax refund.
Breakdown
| Error Category | Count | Dollar Impact | Resolution | Status |
|---|---|---|---|---|
| Sales tax miscoding | 142 | $38.4K overstated | Recoded correct rates | |
| COGS miscategorization | 98 | $24.2K understated | Reclassified by category | |
| Duplicate transactions | 64 | $18.6K duplicated | Duplicates removed | |
| Payroll allocation | 58 | $14.8K misallocated | Reallocated by location | |
| Bank rec gaps | 50 | $8.2K variance | All cleared and matched |
The owner walked into the audit response with clean documentation and walked out with a check. With corrected 3-year books, he was then able to approach a bank for an expansion loan.
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