SCDOR Audit Attorney in South Carolina

An SCDOR audit is a review by the South Carolina Department of Revenue of a state tax return or tax account, such as individual income tax, sales and use tax, or withholding. You have the right to be represented by an attorney throughout the audit. South Carolina Tax Law Firm PA represents individuals and businesses across South Carolina in SCDOR audits, from the first contact letter through the auditor’s findings and, if needed, a protest and appeal.

Call (803) 753-7376 or request a consultation. Have the SCDOR letter in front of you, including the date on it, the tax type, and the periods under review.

Types of SCDOR audits

• Desk or correspondence audits. Handled by mail, usually about specific items on a return, such as a credit, a deduction, or income the Department learned about from another source.
• Field audits. An auditor reviews a business’s books and records, often at the business or a representative’s office, and usually covers several years and tax types.
• Audits based on IRS information. South Carolina receives information from the IRS. When the IRS changes a federal return, SCDOR may propose matching state tax if the change was not reported.

Taxes SCDOR commonly audits

• Individual income tax. Unreported income, deductions and credits, and residency for people who moved into or out of South Carolina or split time between states.
• Sales and use tax. Untaxed sales, missing exemption or resale certificates, and use tax on equipment and supplies bought from out-of-state sellers without tax.
• Withholding. Employer withholding, worker classification, and withholding on payments to nonresidents.
• Corporate and pass-through entity taxes. Apportionment of income between states, nexus, and entity-level tax elections.
• Accommodations and local taxes administered by SCDOR. Including state accommodations tax and local option sales taxes that the Department collects for counties.

How SCDOR chooses returns for audit

Audits often start when the Department compares information from different sources and finds a mismatch. Common triggers include differences between a business’s federal gross receipts and the sales it reported to South Carolina, IRS adjustments that were not reported to the state, Forms W-2 or 1099 that do not match a return, a change of residency, and industry-wide audit projects. Being selected does not mean the Department has concluded anything is wrong.

How an SCDOR audit works, step by step

1. The contact letter. SCDOR sends a letter or notice naming the tax type, the periods under review, and what it wants to see. We review it and confirm the response date.
2. Power of attorney. With SCDOR Form SC2848 on file, the auditor works with us instead of you.
3. Planning and scope. For field audits, we discuss the scope, the records needed, and the method with the auditor before records are produced, including whether a sample will be used.
4. Organized record production. We review records before they go to the Department, provide what was requested in an organized way, and keep a record of everything produced.
5. Answering questions. We respond to the auditor’s questions in writing where possible and address issues as they come up, before they become findings.
6. Reviewing the findings. At the end of the audit, the auditor shares proposed adjustments. We check the calculations, the sample, and the legal basis for each item, and provide additional records or arguments that may reduce or remove them.
7. Closing the audit. The audit ends with no change, an agreed result, or a Notice of Proposed Assessment. If you disagree, we file a written protest within 90 days and continue through the SCDOR appeal process.

Sampling and estimated assessments

In sales and use tax audits, auditors often review a sample of transactions and project the result across the whole audit period. When records are incomplete, the Department may estimate the tax from other information, such as bank deposits or industry averages. A sample or estimate can overstate the tax if it includes unusual transactions, ignores exempt sales, or uses the wrong period. These issues are worth raising early, while the auditor can still adjust the method, and they can be challenged in a protest.

How far back SCDOR can go

SCDOR generally has three years from the date a return was filed to propose additional tax. The period can be longer in some situations, such as when no return was filed or a return was fraudulent, and it can be extended by agreement. If the IRS changes your federal return, South Carolina generally requires you to report the change on an amended return within 180 days, and an unreported federal change can give the Department more time to assess. Before agreeing to extend the period, get advice on the scope of the agreement.

Records to gather for an SCDOR audit

• Filed state and federal returns for the audit periods
• General ledger, sales journals, and bank statements
• Sales invoices, point-of-sale reports, and exemption and resale certificates
• Purchase invoices and fixed asset records, for use tax
• Payroll records and Forms W-2 and 1099
• For residency questions, records showing where you lived, worked, voted, banked, and were licensed

Gather what you have, but let us review it before anything goes to the Department.

SCDOR audits and your federal taxes

State and federal audits are often connected. An IRS change can lead to an SCDOR assessment, and an SCDOR audit of a business can raise questions about its federal returns. When both agencies are involved, we coordinate the positions so they are consistent. If the IRS is also auditing you, see our IRS audit defense page.

Attorney experience

The firm is led by attorney Daniel P. Knudsen, who has represented taxpayers in tax controversies for more than 10 years. Before entering private practice, Daniel represented taxpayers before the IRS at a Low Income Taxpayer Clinic funded through the IRS Taxpayer Advocate Service grant program, and had two employment experiences in the Executive Division of another state’s department of revenue. That experience means a working knowledge of how a state revenue department plans and conducts audits and which deadlines matter at each stage.

Daniel holds an LL.M. in Taxation and certificates in International Taxation and State and Local Taxation from Georgetown University Law Center, and completed the Tax Litigation Training Program, a professional certificate program, at Villanova University Charles Widger School of Law. Every SCDOR audit is handled by an attorney from the first letter through final resolution.

SCDOR audit help throughout South Carolina

Our office is in Spartanburg, and we represent SCDOR audit clients throughout South Carolina, including Greenville, Columbia, Charleston, North Charleston, Mount Pleasant, and Rock Hill. SCDOR headquarters is in Columbia, and the Department has auditors around the state. Desk audits are handled by mail and phone, and field audit meetings can usually be arranged near you.

SCDOR audit questions

How long does an SCDOR audit take?

A desk audit can be resolved in weeks if the records are clear. Field audits of businesses commonly take several months or longer, depending on the number of periods and tax types and how quickly records can be produced.

Do I have to meet with the auditor myself?

Usually not. With a power of attorney on file, your attorney can handle meetings and communications. The auditor may still need a tour of a business location or information only you can provide, and we prepare you for that.

What if I don’t have all my records?

Missing records do not end your defense. Records can often be rebuilt from bank statements, vendors, customers, and third parties. Without them, the Department may estimate the tax, so reconstructing what you can usually leads to a better result than leaving the estimate unchallenged.

Can owners be personally liable for a business’s state taxes?

In some cases, yes. Sales tax and withholding are collected from customers and employees and held for the state, and South Carolina law can make responsible owners or officers personally liable when those taxes are not paid. That risk is a reason to address a business audit early.

What happens if I disagree with the audit result?

You can file a written protest within 90 days of the Notice of Proposed Assessment. The protest goes to the Department’s appeals staff, and if it is not resolved, you can take the case to the South Carolina Administrative Law Court. See our SCDOR appeals page for the full process.

Related tax controversy services

• SCDOR appeals and the SC Administrative Law Court
• South Carolina sales and use tax audits
• South Carolina residency audits
• SCDOR collections, liens, and wage garnishment
• IRS audit defense
• IRS penalty abatement

Talk to a South Carolina SCDOR audit attorney

If you received an SCDOR audit letter or the auditor has shared proposed findings, call (803) 753-7376 or request a consultation. Tell us the tax type, the periods under review, and the date on the letter. Please don’t include confidential details in the contact form. Submitting it does not create an attorney-client relationship.

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South Carolina Tax Law Firm PA is a private law firm and is not affiliated with the South Carolina Department of Revenue, the IRS, or any government agency. Attorney responsible for this content: Daniel P. Knudsen, 405 S. Pine St., Suite F, Spartanburg, SC 29302. This page provides general information, not legal advice. Every case depends on its own facts, and no particular outcome can be promised.

Reviewed by Daniel P. Knudsen, attorney, October 2026.