California State Tax Archives - Page 9 of 10

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.

Employment Development Department Appeals

April 23, 2026August 1, 2014 by Brotman Law

It is important to note that according to Unemployment Insurance Code (“UIC”) Section 1735, an officer, owner or any person in charge of affairs of any corporation, LLC or LLP, is personally liable for the amount of the contributions, withholdings, penalties, and interest unpaid by business entity, if business entity willfully fails to pay the amount. Assessments become delinquent if not paid before they become final, and subject to a penalty of 10%. UIC Section 1135. Sections 1222 and 1224 provide that assessments become final (and delinquent) after 30 days from an assessment date, or if taxpayer petitions or appeals assessment, within 30 days of an Administrative Law Judge or Appeals Board decision date. Therefore, filing an appeal generally extends time to pay tax.

Key Takeaways

Employment tax assessment imposed by EDD under UIC is appealed before Administrative Law Judge. Employer-taxpayer needs to file a petition for review or reassessment within 30 days of service of a notice of assessment or denial of claim for refund.
In appeal petition employer who appeals must put name of the petitioner (person or business entity), employer EDD account number, the mailing address of the employer.
Prior to hearing before administrative law judge taxpayer can and probably should request a copy of all documents in the audit file. EDD will charge small amount for copying file. Then taxpayer can review EDD’s answer to his or her petition.

Independent Contractor Reclassification Audit

April 23, 2026January 15, 2014 by Brotman Law

The Employment Development Department in California has been particularly aggressive in the area of independent contractor reclassification audits. In the eyes of the Employment Development Department, California businesses have been abusing the system by treating workers who should be classified as employees as independent contractors. In doing so they shift the burden for payroll taxes onto the worker and avoid their own contributions to the payroll tax and unemployment insurance system. As a result, the Employment Development Department has been particularly vigilant in auditing businesses for perceived abused of the system. Often these independent contractor reclassification audits can be costly for businesses.

Key Takeaways

The Employment Development Department in California has been particularly aggressive in the area of independent contractor reclassification audits.
Employment Development Department independent contractor reclassification audits are potentially costly for businesses.
Many businesses make serious mistakes during an independent contractor reclassification audits. First, they assume that having an independent contractor agreement will protect them in the audit. This categorically false.

California Bank Levy Release

April 23, 2026January 9, 2014 by Brotman Law

Key Takeaways

One important thing to note is that a levy on the assets in your bank account is one method that the California Franchise Tax Board has as a means of ensuring taxpayer compliance.
Typically, there is a twenty-one day holding period associated with a Franchise Tax Board levy so that the taxpayer has time to enter into a payment arrangement or seek a California bank levy release.
California bank levy releases are best obtained by calling the Franchise Tax Board and working to immediately resolve the liability.

When a California taxpayer fails to make proper tax payments, the Franchise Tax Board can take a number of actions against them.

One of these measures includes initiating a California bank levy against the taxpayer, which is a seizure of their assets in their bank account. The only way to prevent this is to obtain a California bank levy release.

One important thing to note is that a levy on the assets in your bank account is one method that the California Franchise Tax Board has as a means of ensuring taxpayer compliance. However, in cases where the Franchise Tax Board initiates a California bank levy, it is important to be aware of the proper tax procedure that is involved and what steps must be taken before funds are appropriated by the Franchise Tax Board.

Franchise Tax Board Attorney Hiring Criteria

April 23, 2026December 28, 2013 by Brotman Law

Click here to read the previous section about hiring a Franchise Tax Board Lawyer.

Key Takeaways

In my last article, I talked about rapport and how important it was in making the decision to hire a Franchise Tax Board attorney.
Second to rapport, experience is one of the main factors that I feel separates franchise tax board attorneys from one another.
One of the greatest ways to evaluate an attorney is through what other people have said about the person. With the advent of the internet, information on professional service providers is often readily available and can readily be accessed.