Repayment of past withheld sales tax

[S&D Associates]

I have a new client that did not remit sales tax to the sales tax authority. He was audited and is now paying past sales tax to the taxing authority. Are those sales tax payments a deduction for federal purposes?

[Uncle Sam]

Did the audit period include the period the tax wasn't remitted for?
The sales tax (unless it's a purchase use tax) is not a Federal tax deduction because it is a business liability of taxes imposed on the consumer of the taxable product or service that is to be remitted to the
state - it's a Trust Fund type of tax.

[Rapid Robert]

Although they shouldn't be, were the sales taxes collected included in prior year taxable income? Maybe an opportunity to amend those prior returns.

[kathyc2]

Is this a business or an individual? Was it sales tax collected from customers or use tax on items purchased without sale tax collected?

[Uncle Sam]

Sales tax audits usually don't occur on the individual basis unless connected with a personally owned business.

[BOB W]

Sales tax is collected from the responsible party, usually an individual, if no one or entity can pay the tax.

[BOB W]

I have a new client that did not remit sales tax to the sales tax authority. He was audited and is now paying past sales tax to the taxing authority. Are those sales tax payments a deduction for federal purposes?

If sales tax was part of the sales reported, then yes they are deductible by way of amending sales and creating a sales tax liability account.
If it was Use Tax, an amended return can still be done by debiting the Use Tax against the proper category of purchase and creating a sales tax liability account.
Going one step further, if sales tax was never collected on those sales, sales being correct, I'm not sure what to do?