Blog Archives - Page 39 of 52

Board of Equalization Audits – Accounting Techniques

April 23, 2026August 23, 2014 by Brotman Law

An audit made on a taxable measure basis generally places emphasis on the verification or accumulation of taxable differences as compared to an audit performed on a total sales and claimed deduction basis using individual lead schedules. Auditor will verify that all sources of revenue and deductions have been examined.

Key Takeaways

An audit made on a taxable measure basis generally places emphasis on the verification or accumulation of taxable differences as compared to an audit performed on a total sales and claimed deduction basis using individual lead schedules.
Taxable measure basis may be preferable for BOE in a number of cases.
Another circumstance is where the total gross reported is not an important factor in determining taxable measure.

California Sales Tax Audit Procedures and Techniques

April 23, 2026August 23, 2014 by Brotman Law

The purpose of a California sales tax audit is to correctly measure the tax. The Board of Equalization (BOE) auditor conducts preliminary probing and testing in order to see if there is a potential area of misplaced tax. Sometimes preliminary testing reveals that California sales tax audit of business is not warranted. When deciding whether to waive or perform an audit, the auditors consider the following points:

Multistate Tax Commission Multijurisdiction Resale Certificates

April 23, 2026August 23, 2014 by Brotman Law

Multistate Tax Commission Multijurisdiction Resale Certificates

Key Takeaways

The Multistate Tax Commission (MTC) issued the multijurisdiction resale certificate (MTC certificate) in July 2000 to provide a standard document for businesses to utilize that will be uniformly accepted by sellers.
When a purchaser issues a qualified MTC certificate, the burden is upon the seller to examine each purchase order issued by its customer to determine if the purchase is subject to tax or is for resale.

Board of Equalization Audit

April 23, 2026August 23, 2014 by Brotman Law

Use of Form BOE-504 – Proving That a Sale Was Not a Resale

In a Board of Equalization audit, taxpayers should keep in mind that any of the evidence other than actual resale certificate, by itself is not the equivalent of a resale certificate timely taken in good faith, and may not relieve the seller of the liability for the tax.

Key Takeaways

When it is appropriate to use the “XYZ” Letter process, the auditor will provide the taxpayer with a copy of forms BOE–504–A, B, and C, or other type, if applicable. Various types of this letter are described on BOE’s web-site.
A period of four weeks will be allowed by the Board of Equalization for the taxpayer to prepare and send the “XYZ” statements and for the customer to reply. It is recommended that the “XYZ” statements be returned directly to the Board of Equalization.
Auditor will provide taxpayer with appropriate forms and return envelopes.

CDTFA Audit of Sales for Resale

April 23, 2026August 23, 2014 by Brotman Law

A Claimed Sale for Resale is Allowed if Supported by Valid Resale Certificate

Key Takeaways

Topic: CDTFA Audit of Sales for Resale
CDTFA auditors can be stringent when enforcing the resale certificate requirement.
CDTFA provides following examples: A purchase order that contains all the elements of a valid resale certificate, containing words “for resale”.

A claimed sale for resale will be allowed in a CDTFA audit if it is supported by a resale certificate that is proper in form and is timely taken in good faith from a person who is engaged in the business of selling tangible personal property and who holds a California seller’s permit. If the purchaser is not required to hold a permit because the purchaser sells only property of a kind the retail sale of which is not taxable, e.g., food products for human consumption, or because the purchaser makes no sales in California, an appropriate notation to that effect will be entered in lieu of a seller’s permit number on the resale certificate under Regulation 1667 governing exemption certificate requirements. A certificate will be considered timely if it is taken at any time before the seller bills the purchaser for the property, or any time within the seller’s normal billing and payment cycle, or any time at or prior to delivery of the property to the purchaser. CDTFA auditors can be stringent when enforcing the resale certificate requirement.

California Sales Tax Audits

April 23, 2026August 23, 2014 by Brotman Law

One of the most common targets in a California sales tax audit is sales for resale. Sales for resale is the most common deduction claimed by California taxpayers and one of the most common targets of the Board of Equalization (BOE).

Key Takeaways

One of the most common targets in a California sales tax audit is sales for resale. Sales for resale is the most common deduction claimed by California taxpayers and one of the most common targets of the Board of Equalization (BOE).
Board of Equalization sales tax auditors are especially careful in examining accounting methods used by taxpayer and use various procedures to verify amounts.
Normally, there are two ways that a Board of Equalization auditor will verify sales for resale.

Board of Equalization sales tax auditors are especially careful in examining accounting methods used by taxpayer and use various procedures to verify amounts. Often, California taxpayers will estimate this deduction and will get tripped up in a sales tax audit when the Board of Equalization auditor uses their verification procedures.

Franchise Tax Board Settlements – Part Two

April 23, 2026August 5, 2014 by Brotman Law

A taxpayer who wants to settle must submit a written request, which must include the following information:

Key Takeaways

11) A listing of all Notice(s) of Proposed Assessment (NPA) and Claim(s) for refund for the taxable years involved that are not part of taxpayer’s settlement request.
All settlement requests by taxpayers are reviewed by FTB Settlement Bureau staff who determines if the case is good candidate for settlement program. Then staff notifies taxpayer of their decision – to begin settlement negations or not.
The settlement program provides expedited method of resolving civil tax disputes.

Franchise Tax Board Settlements – Part One

April 23, 2026August 5, 2014 by Brotman Law

Key Takeaways

A statement is placed in the office of the Executive Officer of FTB if approved reduction in tax or penalties is more than $500.
1) The name or names of the taxpayers who are parties to the settlement;
3) The amount agreed to pursuant to the settlement;

Franchise Tax Board Settlements

California Employment Development Tax Settlements

April 23, 2026August 1, 2014 by Brotman Law

California EDD offers taxpayers tax settlement program, where EDD and taxpayer can settle a claim for less than the amount owed. EDD can settle if it evaluates costs and risks associated with the litigation of the case and determines that it is better and less expensive for EDD to settle for lower amount than to litigate in court. The Settlements Program allows an employer the opportunity to enter into a settlement agreement to also avoid the cost of prolonged litigation associated with resolving a disputed employment tax matter.

Key Takeaways

California EDD offers taxpayers tax settlement program, where EDD and taxpayer can settle a claim for less than the amount owed.
still in progress or involves fraud, intent to evade, and/or a criminal violation(s), the case is generally not eligible for settlement.
When reviewing an offer, the EDD will consider the risk of loss for the State and the cost of litigation balanced against the benefits of reaching a settlement agreement.

Employment Development Department Appeals – Part 2

April 23, 2026August 1, 2014 by Brotman Law

For appeal taxpayer should prepare and file a pre-trial brief or memorandum of points and authorities, in which he or she must describe relevant law and apply it to his or her case in support of appeal. Taxpayer may want to locate and interview helpful witnesses, including workers previously interviewed by EDD, principals of business and management employees.

Key Takeaways

For appeal taxpayer should prepare and file a pre-trial brief or memorandum of points and authorities, in which he or she must describe relevant law and apply it to his or her case in support of appeal.
Then parties to appeal (Taxpayer and EDD) can stipulate as to facts – to agree on certain facts that will not be disputed by either party. After that judge will conduct a hearing.
For those lacking English skills sufficient to understand or present their case EDD will provide interpreters free of charge. Evidence rules are more relaxed than in regular court proceeding. Basically, any relevant evidenced can be presented.