Awards & Recognition
In the heart of America, San Francisco stands as a testament to ambition, innovation, and enterprise. Its iconic skyline, renowned for landmarks like the Golden Gate Bridge and Transamerica Pyramid, narrates tales of financial prowess, and its diverse neighborhoods resonate with the dreams of millions. Yet, beneath this facade of success, the intricate web of federal and California state tax laws poses a daunting challenge.
If you live, work, or do business in San Francisco, you may someday come face to face with one of the state agencies responsible for performing California tax audits. Just as the IRS audits taxpayers who fail to comply with federal tax laws, California government agencies audit state residents and businesses that fail to comply with the state’s tax regulations, codified in the California Revenue and Taxation Code (RTC). These State tax agencies include the Franchise Tax Board (FTB), the California Department of Tax and Fee Administration (CDTFA), and the Employment Development Department (EDD).
Furthermore, 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. State agencies often share their information with the IRS. 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 and California state tax returns and is now under audit and thus fears criminal tax prosecution.
At the Tax Law Offices of David W. Klasing, we can educate your understanding of the stages of an audit, criminal tax investigation, tax crime indictment, and prosecution, as well as the red flags that may pique the interest of the IRS or the California Franchise Tax Board (FTB), California Department of Tax and Fee Administration (CDTFA) and the Employment Development Department (EDD) and trigger the entire audit / criminal tax investigation, sequence. If you or your small business has been selected for a state tax audit in San Francisco, and you are concerned about a criminal tax investigation resulting from or occurring alongside the audit, engaging our San Francisco Tax Audit Defense Attorney & CPAs 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. To date, we have never had a federal or California state audit client criminally prosecuted for tax crimes.
FTB, EDD, and CDTFA Tax Audit Attorneys in San Francisco
In addition to preparing for your state tax audit and negotiating on your behalf throughout the examination process, we also provide California tax appeals representation in San Francisco. If you disagree with the results of your audit, our attorneys & supporting CPAs can help you challenge the outcome, vigorously disputing improper penalties, interest charges, or proposed tax assessments. Call us today at (888) 564-1409, contact us online here, or reach our San Francisco office directly at (415) 287-6568 for your reduced-rate initial tax consultation.
What Should I Do If the FTB Audits Me in San Francisco?
The California Franchise Tax Board (FTB) enforces the state’s income tax laws. The FTB may conduct their investigations regarding issues unique to California’s income tax laws or may bring a challenge based on their assessment of your level of compliance. For example, there may be issues if you recently moved to San Francisco regarding:
- When you became a resident,
- When you started owing taxes to the state.
The IRS and the California FTB have different rules regarding net operating losses. As such, you may sometimes owe large debts to the FTB even if you are not found to owe anything to the IRS. California tax audits are no less severe than federal audits because California also prosecutes tax crimes and will report the audit results to the IRS. Therefore, you will be forced to amend your federal returns to agree to the results of the California Audit.
Do not panic if the FTB notifies you of a greater tax liability than you initially anticipated. It is possible that the FTB auditor made an error and reached an inappropriate conclusion regarding your liability. You may owe considerably less than the FTB plans to bill you for. It is worth exploring the possibility of:
- Filing a written protest,
- Appealing to the Office of Tax Appeals if the FTB has already issued a Notice of Action
At the Tax Law Offices of David W. Klasing, we are nationally recognized, award-winning tax attorneys who bring nearly three decades of combined experience to each appeal and protest we handle. We are well-versed in FTB and OTA appeal and protest procedures under the updated California tax laws. We can protect your best interests while working efficiently to resolve the controversy. We have four objectives in each case we handle:
- Holding your tax liabilities to a minimum;
- Providing you with the information you need to make informed and strategic decisions;
- Protecting your liberty by minimizing the risk of prosecution for California tax crimes and
- Helping you comply with the California state law.
If you have any questions about protesting an FTB decision, contact our California FTB audit attorneys online here, or reach our San Francisco office directly at (415) 287-6568 for your reduced-rate initial tax consultation.
What Should I Do If the CDTFA (BOE) Audits My Business in San Francisco?
The California Department of Tax and Fee Administration (CDTFA) (formerly BOE) is responsible for auditing issues related to the payment of California state sales taxes. This includes problems such as your business failing to charge the correct sales tax or charging sales tax but not correctly remitting it to the state. If the CDTFA believes your business is underpaying sales taxes, they will request to review your books and other documents, comparing the information in your business records to the amount of sales tax revenue remitted to the state. A California sales tax audit can become your worst nightmare if you underreport cash sales.
Furthermore, the CDTFA is known to share information with other government agencies. Problems found in an audit by the CDTFA are likely to be reported to the IRS and the FTB. For businesses like bars requiring licenses and licensed professionals, the CDTFA may also report to the licensing board or credentialing authority. For business owners and professionals who depend on their licenses, a sales tax audit can trigger a series of events that can only be described as a nightmare.
At the Tax Law Offices of David W. Klasing, our innovative, forward-thinking team of tax attorneys and accountants provides:
- Sales and use tax audit and appeals representation
- Criminal tax defense representation
- Business bookkeeping, tax planning, and compliance services
Whether you are facing a sales or use tax audit, are concerned about criminal tax exposure, or simply have questions about best practices for bookkeeping and accounting, tax planning, or tax compliance, rely on our dual-licensed San Francisco CDTFA Tax Lawyers and CPAs for clear and trustworthy guidance. We
know how to navigate the complex state tax laws and government audit procedures and zealously advocate for you. We will ensure your business is treated fairly during its sales tax audit. This means:
- Ensuring the government does not overstep its bounds by interpreting complex sales tax laws to your disadvantage and
- Preventing the government from making unfair assumptions about your business revenue
Note: The government is often wrong in its conclusions, and it frequently takes a sales tax attorney to threaten litigation for the government to admit its error. Our San Francisco Sales Tax Attorneys will advocate fiercely for you, ensuring the CDTFA does not overtax your business simply because the California government needs the revenue. If you have any questions about a CDTFA audit or need representation, contact the Tax Law Offices of David W. Klasing online or call (415) 287-6568 for a reduced-rate consultation today.
Navigating Payroll Tax Issues with the California Employment Development Department (EDD)
The California Employment Development Department (EDD) deals with issues related to the state payroll tax. Employers must take payroll taxes out of their employees’ checks and hold the money in trust to eventually turn over to the appropriate state or federal agency. Payroll tax issues can come up in federal audits in addition to audits by the EDD. If you are not taking the proper amount out of your employees’ paychecks or failing to turn the money held in trust over as required, you could face civil or criminal tax penalties.
Most of the issues in these audits relate to disputes about whether an individual is an employee or an independent contractor. Payroll taxes are not required to be taken out of checks paid to independent contractors. There are various ways that the California state calculates who is and is not an independent contractor. Our experienced San Francisco California State Tax Audit Attorneys & CPAs can help gather evidence to show the EDD you have correctly classified workers as independent contractors.
Whether you are concerned about a criminal tax investigation, need assistance preparing for a payroll tax audit, or simply wish to review your company’s payroll tax procedures for accuracy and efficiency, rely on our dual-licensed San Francisco Employment Tax Attorneys and CPAs at the Tax Law Office of David W. Klasing in for award-winning support. We know how to navigate worker classification audits, payroll tax audits, and criminal tax investigations and are ready to act swiftly on your behalf to achieve damage control. See our client testimonials here.
Does the FTB, CDTFA, and EDD Discover Tax Fraud?
If a California FTB, CDTFA, or EDD employee reviewing a return notes something suspicious, the matter might be referred for an audit or criminal tax investigation. The FTB, CDTFA, and EDD extensively train their agents to look for what is known within the agency as “badges of fraud,” or indicators on the return or the client’s records that provide evidence that the taxpayer is trying to defraud a California tax agency in some way. Some such badges of fraud that agents and auditors will be on the lookout for include obvious understatements of income (especially understatements of cash basis sales), especially when compared to prior returns, claiming substantial business deductions for personal expenses, attempts to conceal foreign or offshore bank or financial accounts, dealing in cash, using Zapper software, making flashy and expensive purchases while claiming a meager income, and a failure to cooperate with FTB, CDTFA or EDD agents.
Proactive Strategies for California State Voluntary Disclosure and Tax Compliance
At the Tax Law Offices of David W. Klasing, we can work to enter you into a voluntary disclosure program before California begins auditing you or opens a criminal tax investigation. This approach provides a structured and secure way to amend your fraudulent tax returns while steering clear of criminal tax prosecution. Like the IRS, the State of California’s Franchise Tax Board (FTB) and the California Department of Tax and Fee Administration (CDTFA) offer methods for non-compliant taxpayers to become compliant again by disclosing their non-compliance with state tax laws. The approach for voluntary disclosure to the FTB varies depending on whether you file taxes from within or outside the state.
Our dual-licensed San Francisco Domestic and International Tax Compliance & Preparation Attorneys & CPAs specialize in navigating the intricacies of both federal and California state voluntary disclosures. This includes domestic and offshore disclosures, CDTFA and FTB voluntary disclosures, streamlined procedures, and procedures for delinquent FBAR and international information return submissions. Taxpayers in San Francisco who have willfully evaded Federal and California state taxes, including not filing foreign information returns, can generally return to compliance and avoid criminal tax prosecution if they voluntarily disclose their tax non-compliance before the IRS or California State agency initiates an audit or criminal tax investigation.
Contact Our San Francisco Office Today for all IRS, FTB, CDTFA, and EDD Tax Audit Needs
If you have been notified of an upcoming state tax audit in San Francisco 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 Francisco office at (415) 287-6568. Please note that our San Francisco office is by appointment only.
Our San Francisco office is conveniently located at:
1390 Market St #200,
San Francisco, CA 94102
(415) 287-6568
