That mainstay of state budgets, the sales tax, is under intense recessionary pressure. Collections plummeted 6.1 percent in the last quarter of 2008 compared with the same period in the previous year, according to a report released this week by the Nelson A. Rockefeller Institute of Government. That’s the sharpest year-over-year decline in the past 50 years.

With states’ revenues diving and their budgets buckling, can an uptick in sales tax audits be far behind?

Probably not, according to Global 2000 tax pros polled by transaction tax management software provider Sabrix Inc. in November. Fully 88 percent said that they expected state and local revenue shortfalls to result in an increased number of audits. And 61 percent thought that the financial crisis would make it more challenging to achieve sales and use tax compliance.

Which is already plenty challenging enough, to be sure. For many corporate tax departments, it’s not so much the complexity of sales tax rules that’s so frustrating — it’s their sheer volume.

Take a glance at the 2008 Sales Tax Rate Report published this month by Vertex Inc., a corporate tax solutions provider. It shows a scary 1,048 changes in sales tax rates in cities, counties, and states around the country last year. True, that figure is unusually high, primarily because of a bunch of county rate changes triggered by the expiration of Iowa’s School Infrastructure Local Option tax. Still, the number of changes in a typical year is staggering. Since 1998, there have been, on average, 486 rate changes per year. And that’s on top of the 260 new sales and use taxes that are instituted every year, according to Vertex.

Given the difficulties companies face in keeping up-to-date with these changes, the states’ scramble for revenue may trigger an equally frantic scramble among companies that need to get their sales tax processes in order. ###