Dually Licensed Orange County Sales Tax Audit Attorneys & CPAs
Almost every state in the U.S., including California, observes sales tax, and Orange County represents a large population of California businesses. In fact, sales tax is such an important source of revenue that government agencies, such as the California State Board of Equalization (BOE), take very aggressive measures to actively conduct an Orange County sales tax audit on a regular basis. Tens of thousands of these examinations have been conducted by the BOE over the past several years, and if you work within certain high-risk industries, your likelihood of being selected rises even higher.
There are many reasons your business may have been chosen for an examination. Triggering causes can range from discrepancies in your records, to having an association with a vendor or investor who was previously audited, to simply being selected at random by an algorithm. But no matter why your company was selected, it is critically important that you take the notification seriously and approach the process with the assistance of an experienced dually licensed Orange County Sales Tax Audit Attorney & CPA.
With the combined acumen of both an accountant and legal advocate, dual CPA and California tax lawyer David W. Klasing can help your business through every stage of the process -- from reviewing your books for accuracy before the examination starts, to protecting your legal rights as a taxpayer during the review, to fighting any criminal tax fraud allegations which may arise. Whether your company is large or small, the experienced legal team of Orange County Sales Tax Audit Attorneys & CPAs at The Tax Law Offices of David W. Klasing can work with you to minimize your liabilities and bring you into compliance with the law.
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What to Expect if Your Business is Selected for an Audit
In California, sales tax is administered by the California Department of Tax & Fee Administration, sometimes referred to as the CDTFA. The CDTFA openly states that sales tax is responsible for more than 80% of the revenue that they collect. As you might expect, audits on sales tax for small businesses are correspondingly very common. After being selected for an sales tax audit by the CDTFA, you should take two critical first steps: remain calm and contact an Orange County Sales Tax Lawyer & CPA immediately. Approaching the matter with legal representation will help protect you against both overzealous taxation and any criminal allegations which may follow the audit.
Of course, you will be best prepared if you have an idea of what to anticipate. Generally speaking, the BOE will look for any revenue which was improperly taxed, as well as any revenue where sales tax was collected, but never remitted.
Depending on how much sales tax a business collects, its remittance frequency may be monthly, quarterly, or perhaps even yearly. However, even if your Orange County business does not collect sales tax from its customers, that business is still responsible for the tax and its remittance to the state government. On the heels of Assembly Bill 155, which took effect in September of 2012, even purely web-based retailers which do not maintain brick-and-mortar locations must remit sales tax to the BOE.
It is unusual for the BOE to surprise companies with unannounced audits, simply because advance preparation streamlines the process on both ends of the arrangement. You will most likely receive notification via phone, at which point the examiner will supply information such as:
- Which records are to be reviewed.
- The duration of the time period covered by the audit.
- The location and date for the audit to begin.
This is also the stage at which you should inform the auditor you will be working with a representative. Sales Tax Auditors who are aware that their subject is enlisting legal help will be more likely to double check their assessments of noncompliance and will typically avoid engaging in the aggressive tactics that the government sometimes employs against those subjects of audits who do not have legal representation. If you have questions, we would be more than happy to share more information via a reduced rate initial consultation on the benefits of having the assistance of an Orange County Sales Tax Audit Attorney & CPA.
The Sales Tax Audit Process in California
To quote BOE Publication 76, "The objective of an audit is to verify that you have correctly reported taxes or fees on your returns." Publication 76 also highlights six basic questions your auditor will try to answer:
- "Did you report all gross receipts from sales of tangible personal property and taxable labor and services?"
- "Did you report the cost of all business equipment and supplies that you purchased without tax either from out-of-state vendors or for resale that would be subject to use tax?"
- "Did you properly claim deductions?"
- "Did you properly allocate local tax?"
- "Did you use the correct rate of tax when reporting sales in special tax districts?"
- "Did you properly apply tax to your sales and uses of tangible personal property?"
Generally speaking, these audits address records dating back three years, which means locating old records is often an issue. If you have lost or misplaced any of the records which your auditor wishes to review, you should inform him or her immediately, at which point you will be asked to either supply an estimate or reconstruct the missing documentation. An Orange County CDTFA lawyer and CPA can assist you with arriving at accurate estimates and with reconstructing books and records. Our Sales Tax Attorneys & CPAs can also help you prepare for such a circumstance by instituting accessible, easy-to-use organizational systems for your business records.
When the Orange County sales tax audit concludes, the examiner (and possibly his or her supervisor) will arrange for an exit conference. Your representative may attend this conference with you, or in your place. As with a standard examination, you may agree or disagree with the auditor's findings, at which point you will either comply with the assessment or inform your auditor that you are disputing the results, respectively. The auditor may then adjust their findings, ask for additional information, or refer you to a supervisor for additional discussion.
Deadlines for Sales Tax Audits in Orange County
Deadlines are absolutely crucial when it comes to compliance, so don't wait until your window of opportunity has already closed. Government auditors and officials view a failure to comply with a deadline as a failure to comply with the law in question entirely. The subsequent penalties that you may face will resemble those for the most severe violations, even where you made an honest mistake in missing the deadline. Therefore, you should plan to speak with a CDTFA or Sales Tax Audit Lawyer & CPA as soon as possible in order to head off any of these potential difficulties.
If you are concerned that your window has already closed, you can still take positive steps to limit the damage. One of these steps may include engaging in a voluntary disclosure. Voluntary disclosure is a submission of documentation of a taxpayer’s past noncompliance. The government tends to waive penalties for noncompliance where it was saved the time of uncovering the noncompliance through an investigation. There are instances, however, where voluntary disclosure will serve the taxpaying person or business no benefit and may actually be even more incriminating. For instance, if the audit is already underway or the noncompliance has already been discovered, voluntary disclosure may only serve to hurt the discloser. You should never attempt to navigate a voluntary disclosure process without the assistance of an Orange County tax audit attorney.
To arrange for an initial consultation with an Orange County Sales Tax Audit Lawyer & CPA at a special reduced rate, call The Tax Law Offices of David W. Klasing at (949) 681-3502 or (800) 681-1295 right away, or contact us online.
Orange County Tax Law Offices
For any of your tax planning compliance and controversy needs in Orange County, contact the Orange County Sales Tax Audit Attorneys & CPAs at The Tax Law Offices of David W. Klasing today. Our experienced Sales Tax Lawyers & CPAs offer a reduced-rate consultation on new cases or engagements in Orange County. Call (949) 681-3502 or 800-681-1295 or contact us online today to schedule a reduce rate initial consultation at our Orange County tax law offices, or at one of our other convenient locations across Southern California.