How can a sales tax attorney help me?
The CDTFA is the state taxing agency that handles sales and use tax audits and tax collection efforts. Our sales tax attorney can guide you through a tax audit or collection matter. The CDTFA is very active in conducting audits and has a variety of methods to conduct audits and assess taxes to businesses.
Sales Tax Audits
One method that the CDTFA often uses is the mark up test. The CDTFA auditor will obtain the cost of goods sold and then attempt to formulate an average mark up of those goods. The auditor will obtain the current mark up by inspecting the sales price of goods at the current rate. Then the CDTFA auditor will apply that mark up rate to the cost of goods sold reported on the businesses tax return for the last several years. You can read more about the CDTFA Mark Up Test in its audit manual.
In addition, the CDTFA has a variety of other mathematical methods to propose an increased tax assessment. The CDTFA can also attempt to personally assess the business owners with the tax liability of a business. If the CDTFA does attempt this personal assessment, you have appeal rights. The CDTFA has specialized procedures for the following types of business: bars, restaurants, convenience stores, grocery stores, and auto dealerships.
If you are an out of state business with operations or a nexus to California, you may also need to file sales tax returns.
Who is Liable for California Use Taxes?
If you are “engaged in business” in California (as defined by Revenue and Taxation Code section 6203), you may be responsible for collecting and remitting the sales or use taxes on all sales of tangible personal property, unless the transaction is otherwise exempt. Circumstances where a business is considered to be engaged in business in California, commonly referred to as “nexus,” for sales and use tax purposes include (but are not limited to) the following:
- Maintaining, occupying or using any type of office, sales room, warehouse or other place of business in California. This includes use that is temporary, indirect or through an agent or other representative.
- Having any kind of representative operating in the state for the purpose of taking orders, making sales or deliveries, installing, or assembling tangible personal property.
If you or your business has a CDTFA tax liability, you don’t have to pay the entire amount in one lump sum. You can pay the tax liability in monthly payments based on your ability to pay. A sales tax attorney can negotiate an affordable payment plan for you.