What laws or regulations govern the ability of municipalities to audit local businesses to ensure they pay business tax, business licenses, etc? How do they demand information from home business operators and other small businesses to prove taxable receipts, licensing and so on?

Ideally looking for an attorney specializing in this area, preferably one who has represented local small businesses in an audit effort. Published authors or academics with referenceable works welcome to comment too. How far can municipalities go to collect business taxes?