WHAT WOULD YOU DO 6-7 An Unexpected Surprise Your client, a small retail hobby shop, is getting audited by the IRS. The records are pristine, with great documentation, so you are not worried until you look at a few sales invoices and discover that they are not collecting sales tax on internet sales made to customers in California, where the shop is located! These sales total about 30% of the gross income. When you ask the owner of the business he gives you a puzzled look, explaining that customers don't want to pay sales tax on things they purchase online; in fact, that is why they buy them online, to save the tax. He has filed sales and uses tax returns for years, and the company has never been audited. How would you handle this situation? Would your answer change if some of the sales were out of state? How about if you prepared the quarterly sales tax returns for the last few years?