What Is a Sales and Use Tax Recovery Audit? (Quick Answer)
A sales and use tax recovery audit is a review of a company’s invoices, purchase orders, and tax payments designed to identify and recover overpaid sales and use taxes. These audits help businesses uncover tax errors, improve compliance controls, and recover funds that may have gone unnoticed due to the complexity of tax regulations and vendor billing practices.
Because sales and use tax rules vary across thousands of jurisdictions, even well-managed organizations often overpay taxes or incorrectly self-assess use tax. Recovery audits help businesses identify those issues, recover lost funds, and strengthen long-term tax accuracy.
In short: Sales and use tax recovery audits help businesses recover hidden overpayments while improving tax compliance and financial controls
Key Takeaways
- Sales and use tax complexity creates significant overpayment risk: With more than 13,000 taxing jurisdictions in the U.S., businesses frequently overpay taxes or apply incorrect tax treatment.
- Recovery audits help businesses uncover hidden funds: Sales and use tax recovery audits identify overpaid taxes, vendor billing issues, and inaccurate use tax assessments that often go unnoticed.
- Automated tax systems still produce errors: Even companies with advanced sales tax automation tools remain vulnerable to incorrect vendor tax charges and tax coding mistakes.
- Large organizations face greater exposure: The higher the transaction volume and yearly spend, the more likely it becomes that tax overpayments and compliance gaps exist.
- Recovery audits strengthen internal controls: Beyond recovering money, audits help organizations improve tax processes, reduce future errors, and enhance financial oversight.
- The process is designed to minimize internal effort: Modern recovery audit firms streamline data acquisition and claim validation to reduce demands on internal tax and IT teams.
When you think of the phrase “Sales and Use Tax,” you may not feel very excited.
You may even think the topic is boring or overwhelming.
However, here at apexanalytix, “Sales and Use Tax” does get us excited! We know that performing a Sales and Use Tax Recovery Audit means we get to have our favorite conversation: telling a client we discovered money they didn’t know they were owed.
Nickie Hrabosky is one of our passionate and experienced sales and use tax experts. We sat down with her to ask some questions about her work and the Sales and Use Tax Recovery Audit process.
TL;DR — Sales & Use Tax Recovery Audits at a Glance
| Topic |
Key Point |
| What it is |
A review of invoices, purchase orders, and tax payments to identify and recover overpaid sales and use taxes |
| Why it matters |
Sales and use tax rules are highly complex, creating frequent overpayment and compliance risks |
| Main problems uncovered |
Incorrect vendor tax charges, inaccurate use tax assessments, missing controls, and tax coding errors |
| Who benefits most |
High-spend organizations, multi-state businesses, and companies with large transaction volumes |
| Recovery potential |
Businesses can recover significant overpaid taxes that would otherwise remain hidden |
| Technology challenge |
Automated tax systems and ERP environments still produce tax errors without ongoing validation |
| Operational value |
Audits improve tax controls, compliance accuracy, and financial oversight |
| Best practice |
Perform regular sales and use tax recovery audits as part of ongoing internal controls and compliance management |
| Bottom line |
Sales and use tax recovery audits help businesses recover hidden overpayments while improving long-term tax accuracy and compliance |
Tell us a little bit about your background and your current role.
NH: I’ve been in the Sales and Use Tax space for over five years now. Previously I was more on the compliance side. Here at apexanalytix, I am focused on the sales and use tax recovery audits. So, it’s funny, my job used to be explaining to companies how they were out of compliance. Now, I’m helping companies recover money they overpaid.
How do you explain your job to someone at a dinner party?
NH: I say my job is to help companies add to their bottom line, through recovering sales and use tax they overpaid. Sometimes people think this is a dry topic, but I have always found it fascinating, because it’s so complex—especially here in the US. I have genuinely found joy in helping companies uncover money they are owed. It’s always a rewarding conversation when we get to tell clients that we have discovered funds that are rightfully theirs.
Why should a sales and use tax recovery audit be perfomed?
NH: As I said, sales and use tax is very complex. Chances are, not everyone who touches an invoice or purchase order is going to be an expert in sales and use tax. It’s a big issue for most companies, especially those who have sales and use tax completely automated. Every company, especially companies with a large amount of yearly spend, should regularly perform sales and use tax recovery audits as a part of their internal controls procedures. A great time to do a sales and use tax recovery audit is if you believe you’re at risk for overpaying on tax. Additionally, if a company is currently being audited by a tax authority, a sales and use tax recovery audit can be a great way to offset those judgements.
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Case Study
Three Audits, $15.9 Million in Sales and Use Tax Recoveries
Learn how a global leader in logistical operations partnered with apexanalytix to recovery millions in overpaid sales and use tax.
What types of companies should perform as sales and use tax recovery audit?
NH: I want to say all companies! The more spend you have, the more complex sales and use tax becomes. Not only are there over 13,000 taxing jurisdictions in the US, but there’s also the added complexity of taxable and non-taxable goods and services. In my experience, most companies implement software solutions and devote their resources to ensuring sales tax compliance when they invoice their customers. However, they often don’t have controls in place to ensure that vendors are charging them sales tax correctly, and self-assessing use tax accurately.
NH: What I want to emphasize about the process is that, for the client, it’s a small time commitment for a large reward.
Over our years of experience with sales and use tax audits, we have streamlined the data acquisition process to minimize the amount of effort needed from your team, no matter what ERP you have. We make the process for the client, both tax and IT personnel, easy and complete our audits quickly. Our sales and use tax experts partner with our clients to approve claims and maintain transparency throughout the entire audit process.
What would you say to a Tax Manager who may be hesitant to start a Sales and Use Tax Audit?
NH: I know from experience that companies are hesitant about the amount of time a recovery audit will take, and security of how their data is used. apexanalytix has specifically addressed these concerns through proprietary technology and experienced personnel. We’ve worked with many companies who weren’t initially concerned about overpaid sales and use tax, and were pleasantly surprised to discover that apexanalytix could recover millions of dollars. All we need from our clients is a few hours of their time to provide sales and use tax data and review and approve claims. It’s a short amount of time, for a huge impact. You could uncover millions of dollars and be the hero!
To schedule a consultation with one of our sales and use tax experts, get in touch with us.
About the Author
Matthew Morookian
Senior Director of Product Marketing, apexanalytix
Matthew Morookian is Senior Director of Product Marketing at apexanalytix, with over 7 years of experience helping finance and procurement teams understand how to protect and recover company revenue. His work spans product positioning, content strategy, and go-to-market programs focused on audit, risk, and supplier management solutions.
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