Redding Tax Attorney
CDTFA Sales Tax Audit Defense

The CDTFA Redding office audits a wide range of businesses across Northern California, with particular focus on industries prevalent in the region: timber and logging operations, construction contractors, auto dealers and repair shops, restaurants, retail stores, and agricultural businesses. The office also audits businesses for use tax compliance — particularly those that purchase equipment, vehicles, or supplies from out-of-state vendors without self-assessing California use tax. Any business that collects or should collect sales tax can be selected for audit.

Timber and logging businesses face CDTFA scrutiny on several fronts: the sale of harvested timber products, the purchase and use of heavy equipment and vehicles, fuel purchases, and the distinction between manufacturing activities (which may qualify for certain exemptions) and non-manufacturing activities. The CDTFA reviews purchase records to identify out-of-state equipment purchases where use tax should have been self-assessed. They also examine whether sales of processed wood products were properly taxed. A CDTFA sales tax attorney with experience in natural resource industries can identify legitimate exemptions and challenge improper assessments.

Absolutely. This is one of the most important reasons our firm exists for Northern California business owners. The vast majority of CDTFA audit work is handled through document exchange, phone conferences, and written correspondence — the same process regardless of whether a client is in Redding, Los Angeles, or San Diego. When in-person attendance at the CDTFA Redding office is needed, we attend on your behalf. You get the same caliber of specialized tax representation that businesses in major metro areas have access to, without having to travel or settle for a generalist attorney.

Use tax is California's complement to sales tax. When you purchase tangible personal property from an out-of-state seller who does not collect California sales tax, you are required to self-assess and pay use tax at the same rate. Northern California businesses frequently purchase heavy equipment, vehicles, building materials, and supplies from out-of-state vendors — particularly from neighboring Oregon, which has no sales tax. The CDTFA cross-references vehicle registrations, import records, and vendor information to identify untaxed purchases. Use tax assessments can be substantial, but they are often defensible with proper documentation.

Assessments vary widely depending on the type and size of business and the audit period. A small retailer might face an assessment of $10,000 to $50,000, while a construction company or logging operation with significant use tax exposure could face assessments of $100,000 or more. The CDTFA adds interest from the original due date of each period (which can add 25-50% to the total) plus penalties that range from 10% for late filing to 25% for negligence. Effective representation can often significantly reduce both the underlying tax assessment and the associated penalties.

Do not ignore it, and do not respond in detail without first talking to a tax attorney. The audit notice will specify the periods under review and request specific records. How you respond to that initial request — and what records you provide — significantly impacts the audit's direction and outcome. Contact our firm for a free 15-minute consultation. We will review your notice, assess your likely exposure, and develop a strategy. Many business owners try to handle CDTFA audits on their own and end up with assessments that could have been reduced or eliminated with proper representation from the start.