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CDTFA Audit of Sales for Resale

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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.

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California Sales Tax Audits

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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.

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Franchise Tax Board Settlements – Part Two

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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.

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California Employment Development Tax Settlements

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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.

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Employment Development Department Appeals – Part 2

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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.

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Employment Development Department Appeals

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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.

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Conclusions about CRA and Dodd-Frank

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The success or failure of the Dodd-Frank Act will be ultimately judged by history and the impact that it has with combatting some of the problems that have existed with credit rating agencies both before and after the financial crisis of 2008. Already critics have been quick to condemn the act for the perceived over burden that it places on the credit rating agencies or for what others feel is too little regulation that does too little to prevent the evils of the past four decades. Through the research and analysis involved with paper, however, we have come to several conclusions about how the law can be made more effective or where potential shortcomings exist despite its overall intent to promote fairer dealing and more transparency among the agencies.

Key Takeaways

  • Topic: Conclusions about CRA and Dodd-Frank
  • The success or failure of the Dodd-Frank Act will be ultimately judged by history and the impact that it has with combatting some of the problems that have existed with credit r….
  • Already critics have been quick to condemn the act for the perceived over burden that it places on the credit rating agencies or for what others feel is too little regulation th….

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Rules for Credit Rating Agencies

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Additional Rules for Credit Rating Agencies Under the Dodd-Frank Act

Key Takeaways

  • Topic: Rules for Credit Rating Agencies
  • Additional Rules for Credit Rating Agencies Under the Dodd-Frank Act The Dodd-Frank Act also has some new rules for the credit rating agencies themselves with the goal of having….
  • First, the Act places more stringent requirements on the company’s board of directors and institutes are requirement for an independent board.

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Brotman Law Featured in Inc. Magazine - Fastest Growing Law Firm in California