Sales Tax Archives - Page 2 of 3

Sales Tax Mistakes to Be Aware of and How to Avoid Them

April 23, 2026May 3, 2017 by Brotman Law

Taxes Concept On File Label In Multicolor Card Index. Closeup View. Selective Focus.Octet Stream

Key Takeaways

Let’s start with this one because it is not something sellers commonly see.
Whether or not a buyer is allowed tax-free status is up to you to find out. You must make certain the buyer has a legal exemption; otherwise, you could be found liable for uncollected sales tax (see jail time above).
Did you know there are over 11,000 sales tax jurisdictions in the US? Not only that, but changes occur annually.

As a retailer or other seller of products, you have a lot of details to attend to but one of the most important, often most complex, is your sales and use tax obligations. Sometimes determining sales tax is like peeling an onion; just when you think you have found all the nuances, there is another layer to contend with.

Non-payment of sales and use tax comes with stiff fines, potential jail time, and repayment requirements. Avoiding all that is essential to both your business and your well-being.

What Sales Are Subject to Sales Tax?

April 23, 2026April 19, 2017 by Brotman Law

Midsection Of Saleswoman Holding Credit Card While Using ETR Machine At Boutique Counter

Key Takeaways

A district can be an entire county or part of a municipality. District taxes are approved by the local voters and are used for special services, such as libraries, or general services. Sales and use taxes go into the state’s general fund.
Use tax is typically collected by the retailer at the time of sale, but it is imposed on items for use in California but purchased outside of the state.
The seller is responsible for paying the correct amount of tax to the BOE and almost always collects it from the purchaser.

Nearly all states in the U.S. charge sales tax on items sold, California is no different in that regard. Sales taxes go into the general fund to help pay for education, health care, public pensions, and other programs. Sales taxes can also be collected for special programs or specific areas of the state.

Your Rights as a Taxpayer with the Board of Equalization

April 23, 2026March 29, 2017 by Brotman Law

The Board of Equalization (BOE) administers the tax program for both business and property taxes for the State of California. Business taxes include:

Sales and use tax
Fuel tax
Cigarette tax
Alcoholic beverage tax

Business taxpayers may take up their concerns directly with the main office of the BOE while property tax concerns are addressed by the local county office.

When you deal with the tax agencies of California, you may feel like you do not have any rights. These agencies can be aggressive and overwhelming to most individuals unused to dealing with them.

How to File an Appeal with the California Board of Equalization

April 23, 2026February 1, 2017 by Brotman Law

Key Takeaways

The Board of Equalization reviews your position. At this time it may ask for additional records or documentation to support your position.
If you have not already requested an appeals conference or have missed the deadline for responding to the Board’s conclusions, a Notice of Redetermination will be issued to you with the staff’s conclusion.
If you are continuing with the appeals process, you will receive a Verification of Appeals Conference Form, which must be completed and returned within 15 days.

The California Board of Equalization has audited you and found potential underpayment of taxes, fees, or additional amounts the BOE determines you owe.

Your next step is to meet with the BOE supervisor and then the District Principal Auditor. If you do not convince them that the results are in error, you can file an appeal.

What is a Sales Tax Nexus and How Does It Affect My Business?

April 23, 2026January 18, 2017 by Brotman Law

Key Takeaways

A state may create legislation requiring a seller with nexus in that state to pay tax on sales of tangible property within the state.
The State of California specifies exactly what “engaged in business” means on the state and local level.
Nexus has been around in some form since taxes were invented but the need for retailers from outside the state to collect and remit sales tax expanded each time a new selling innovation came along.

A state may create legislation requiring a seller with nexus in that state to pay tax on sales of tangible property within the state.

What is nexus and how does it affect your business?

California Tax Guide for Marijuana Businesses and Proposition 64: The Adult Use of Marijuana Act

April 23, 2026November 16, 2016 by Brotman Law

Key Takeaways

1. Marijuana related businesses and dispensaries typically deal with large amounts of cash because of the limitations associated with the federal banking system and marijuana business.
2. We anticipate a heightened risk of audit is because this is a “new” industry for the Board of Equalization and there’s not a lot of statistical data associated with marijuana businesses.

On Tuesday, California voters passed historic legislation by voting to allow the recreational use of marijuana in California. Regardless of your opinion about marijuana use, the legislation will have a huge impact on the state of California and its citizens and will bring a large source of new taxable revenue into the state. Because of the complexity surrounding the tax laws surrounding the new measure, I have put together a rough guide of issues for marijuana businesses and California citizens to be aware of.

CDTFA Sales Tax Audits, Pt 4: After the Audit

April 23, 2026September 28, 2016 by Brotman Law

Key Takeaways

If the supervisor was not present at your exit conference, you may now request a meeting with that person if you and the auditor are unable to reach an agreement about the audit findings.
The DPA is actually relatively helpful in resolving issues or clarifying the CDTFA’s position on them.
Afterward, you will have a follow-up meeting the CDTFA representative and make your presentation once again.

Here is the final installment of our four-post series about California Sales Tax and Use Audits. In Part 1, we cover how audits are triggered and companies selected for audit. Part 2 is about how the audit is conducted and the types of documents you may be required to provide. Part 3 gave you some tips for working with an auditor and the type of investigation an auditor may perform.

In Part 4 we take up what happens after an audit is complete, and how an experienced tax attorney can help you through the process of an audit by the California Department of Tax and Fee Administration.

CDTFA Sales Tax Audits, Pt 3: How to Prepare for an Audit

April 23, 2026September 21, 2016 by Brotman Law

Key Takeaways

Welcome to Part Three in the CDTFA sales tax audit series.
Now you will learn how to prepare for an audit, including how to work with an auditor and which records and documents to have ready.
Provide the auditor easy access to your facility. Include a tour to review the workflow, the types of controls you have in place, and to explain the use of any new machinery. If the auditor is on the premises for a while, offer a comfortable desk or office.

Welcome to Part Three in the CDTFA sales tax audit series. In Parts One and Two, we provided an overview of how an audit is conducted and how companies are selected for audit as well as audit procedures and techniques.

Now you will learn how to prepare for an audit, including how to work with an auditor and which records and documents to have ready. You will also read about audit testing and sampling as well as the PAPE program and cut-off techniques.

One note before you begin your preparations: be ready to comply with auditor requests but do not volunteer additional information. Do not sign anything without careful examination because the auditor is unlikely to explain the consequences or agreements; it is up to you to research and clarify what you do not understand.

CDTFA Sales Tax Audits, Pt 2: Audit Procedures and Techniques

April 23, 2026September 14, 2016 by Brotman Law

Key Takeaways

The State of California does not have a fixed structure for conducting audits. An auditor is authorized to use a range of methods to find any necessary information.
Auditors may ask for a wide variety of documents from the tax years under investigation.
They may also request documents to support exempt sales, such as resale certificates.

This post is the second in a four-part series explaining how the California Department of Tax and Fee Administration (CDTFA) performs its audit function, what to expect from an audit, how to prepare for it, and what happens when the audit is complete.

The first post of this series explained the role of the CDTFA and the goals of a sales tax audit. It includes when an audit can occur, how companies are selected for audit, and common audit triggers.

This post takes up how the audit is conducted, what records are requested, and the type of tests auditors use to verify tax filings.

CDTFA Audits, Pt 1: What Is an Audit and How Are Companies Selected?

April 23, 2026September 7, 2016 by Brotman Law

Key Takeaways

A sales tax audit occurs when the CDTFA suspects a business’s reported sales have been understated. Typically, records cannot be verified by a direct audit approach, meaning the CDTFA cannot match everything a business reports to it and the other agencies.
A mark-up audit is often used to prove materially misstated or fraudulent accounting, especially for cash-intensive businesses.
Auditors will also approach a vendor to compare the dollar amount of goods sold to the business under audit matches what the business’s cost of goods sold account for the same period.

This post in one in a four-part series explaining how the California Department of Tax and Fee Administration (CDTFA) performs its audit function, what to expect from an audit, how to prepare for it, and what happens when the audit is complete.