Awards & Recognition
San Diego is one of the San Francisco region’s most prominent and busiest trade centers. It’s also one of the largest ports in the country, with tens of billions of dollars in cargo passing through the port each year. However, while Oakland may be an economic powerhouse, even its most affluent residents can face intense financial pressures due to California state and federal tax regulations and civil/criminal law enforcement’s unintended consequences.
Every San Diego business has unique tax needs depending on its size, assets, debts, goals, and other factors. At the Tax Law Offices of David W. Klasing, we offer a broad, highly customizable range of business tax planning services, enabling our team to provide targeted, practical support for corporations, LLCs, partnerships, and sole proprietorships. Whether you are starting a business in San Diego, preparing for an employment tax audit, considering a merger, appealing a Franchise Tax Board decision, or rethinking your business plan after the Tax Cuts and Jobs Act, look to the Tax Law Office of David W. Klasing for experienced California state tax representation that you can rely on.
In addition to having years of experience as a dually licensed Tax Lawyer and CPA in San Diego, our founder and principal attorney, David W. Klasing, possesses decades of experience as a former auditor in public accounting and has represented clients in federal (IRS) and California (FTB, CDTFA (BOE), EDD) audits for nearly 30 years, enabling our tax team to navigate the audit process with precision and skill. Should you be facing an audit, whether a correspondence, office, or field tax audit, we are ready to stand by your side and navigate you through the meetings with the IRS, FTB, CDTFA & EDD. Call (619) 780-2538 or schedule a reduced-rate initial consultation here at our San Diego office or other convenient locations across Northern California.
What Triggers a California State Tax Audit?
Like the IRS, the California Franchise Tax Board (FTB) will look for certain red flags indicating an audit is warranted. These do not need to be explicit signs of criminal tax evasion or other willful activity. It is possible that the FTB could trigger an audit on a person or small business that fits the description of common examples of noncompliance.
Small businesses with multiple parent or subsidiary entities may draw the attention of the FTB for tax auditing. The FTB is also more likely to audit small businesses with a much higher proportion of independent contractors than employees, as many employees are often misclassified as independent contractors in favor of their company. Businesses that meet most of their payroll obligations in cash can also provoke additional government scrutiny. Hence, it would be wise for cash-intensive businesses to keep accurate, detailed, and extensive records.
If you disagree with the results of an FTB audit, you may challenge or “protest” the outcome. If FTB has contacted you and you know you made false statements or used inaccurate reporting techniques when filing your taxes, do not face the audit alone. Contact our experienced dual-licensed San Diego FTB Audit Appeals Attorneys and CPAs. We will prevent the examining agent from inferring criminal admissions/confessions from your actions and words.
What is California Sales Tax?
In addition to income, payroll, and employment taxes, business owners must contend with California sales taxes, which are collected and enforced by the California Department of Tax and Fee Administration (CDTFA), a relatively new organization established in 2017. The CDTFA assumed many of the duties formerly managed by the California Board of Equalization (BOE), including those relating to sales tax collection and sales tax auditing of businesses.
Given the recent changes in California sales tax laws, particularly following the U.S. Supreme Court’s decision in Wayfair expanding state authority over online sellers, you would be wise to have our dual-licensed San Diego Internet Sales Tax Attorney & CPAs guide you. Our services include internet sales tax audit representation, small business tax planning, and bookkeeping services, leveraging our deep understanding of the evolving business tax landscape. We are well-versed in the intricacies of California sales tax nexus and the differences between sales and use tax. Rely on the Tax Law Offices of David W. Klasing for comprehensive advisory and representation, ensuring your business navigates and flourishes within California’s complex regulatory framework.
Our experienced San Diego CDTFA Tax Audit Attorneys & CPAs will help prepare you for dealing with the CDTFA and ensure that everything is filed promptly. For example, suppose the original auditor closes the case and sends a Notice of Determination that you owe money. In that case, you must file a petition to challenge this within 30 days or risk the Notice being final. It would be wise to consult us before filing an appeal or petition for redetermination due to the legal and financial complexity involved.
How Can I Handle High-Risk California State Tax Audits and Criminal Tax Investigations in San Diego?
When facing high-risk tax audits from agencies like the IRS, CDTFA, EDD, or FTB, certain red flags, such as destroyed records, underreported income, badges of fraud, or unfiled returns, can intensify the examination and may lead to high-risk eggshell and reverse eggshell tax audits (see below). As such, residents and businesses must be aware of potential criminal tax violations and the signs indicating that they might be under a more rigorous investigation by the IRS’s Criminal Investigation Division (CID). This is especially so when the taxpayer has a history of blatantly cheating on their federal tax returns and is now under audit and thus fears criminal tax prosecution. Even international tax evasion schemes that utilize remote tax havens are easily detected by the IRS, which works with tax and law enforcement agencies around the globe and throughout the United States.
If you or your small business has been selected for a tax audit in San Diego and you are concerned about a criminal tax investigation resulting from or occurring alongside the audit, engaging our San Diego Criminal Tax Audit or Investigation Attorneys + CPAs services at the onset of a high-risk audit / criminal tax investigation will maximize the possibility of a favorable outcome without escalating to criminal tax charges. We have never had a federal or California audit client criminally prosecuted for tax crimes.
Does California State Offer Voluntary Disclosure Programs for Non-Compliant Taxpayers in San Diego?
Like the IRS Voluntary Disclosure Practice (VDP), the State of California’s Franchise Tax Board (FTB) and the California Department of Tax and Fee Administration (CDTFA) provide methods for non-compliant taxpayers in San Diego to regain compliant status by coming forward with the details of their failure to comply with the California state tax code. The path to voluntary disclosure to the FTB depends on whether you are an in-state or out-of-state filer. Our dual-licensed San Diego Voluntary Disclosure Attorneys and CPAs are dedicated to assisting in making sincere, comprehensive, and timely disclosures to the IRS and California state tax authorities, which includes arranging for the payment of owed taxes, interest, and penalties and cooperating with the tax agencies to determine the correct tax liability.
We skillfully navigate the complexities of various federal and California state voluntary disclosures, including domestic, offshore, CDTFA, and FTB voluntary disclosures, streamlined procedures, and delinquent FBAR and international information return submission procedures.
What if I Disagree with the Results of a California State Tax Audit?
Auditors strive for accuracy, but errors occur, nonetheless. Unfortunately, an auditing error can translate to devastating outcomes for the taxpayer. If a taxpayer disagrees with the result of a California tax audit – for example, if the taxpayer believes they were fined improperly – the taxpayer can request appeals, initiating the process of disputing the audit’s outcome.
The California state equivalent of the IRS Office of Appeals is the California Office of Tax Appeals, or OTA, created in 2017 with the passage of the Taxpayer Transparency and Fairness Act. This unbiased and autonomous appeals body handles tax disagreements involving the FTB, EDD, and CDTFA (formerly BOE). To file an appeal with the OTA, the taxpayer must:
- Receive either (1) an Appeals Bureau Decision or (2) a Notice of Action from the CDTFA or FTB
- Meet the appropriate deadline for filing the appeal (which will be specified on the taxpayer’s Appeals Bureau Decision or Notice of Action)
- Submit the proper documents, such as OTA Form L-01 (Request for Appeal)
It is vital to submit clear, detailed, and timely information well-supported by robust legal and factual evidence to give your appeal the greatest likelihood of succeeding. One section of OTA Form L-01 states, “You must identify what you believe is in error or has been omitted from the taxing agency’s decision and explain why the identified errors or omissions justify a different result” – without relying on frivolous tax arguments.
Our dual-licensed San Diego Audit Appeals Attorneys and CPAs boast wide-ranging experience in various federal and California state tax matters, representing clients in IRS audits, disputes with the CDTFA, EDD, and FTB, refund claims, tax collection defense, innocent spouse relief, and criminal tax defense. Our proficiency is invaluable in handling cases involving criminal tax exposure, civil tax audits, eggshell audits, reverse eggshell audits, and criminal tax investigations. As seasoned litigators, our team, led by David W. Klasing Esq. M.S.-Tax CPA is prepared to represent you in Tax Court or before the California Office of Tax Appeals. To date, we have never lost in tax court. We won’t take your case if we don’t believe we’ll win.
Contact Our San Diego Office Today
If you have been notified of an upcoming California state tax audit in San Diego or wish to dispute the results of a California tax audit that has already been completed, contact us at the Tax Law Office of David W. Klasing online here or by calling our San Diego office at (619) 780-2538.
Our San Diego Office is Conveniently Located at:
501 W Broadway Suite 800
San Diego, CA 92101
(619) 780-2538
